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Full text of "Implementation of Indian Gaming Regulatory Act : oversight hearing before the Subcommittee on Native American Affairs, Committee on Natural Resources, House of Representatives, One Hundred Third Congress, first session, on implementation of Public Law 100-497, the Indian Gaming Regulatory Act of 1988"

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^    IMPLEMENTATION  OF  INDIAN 
^^         GAMING  REGULATORY  ACT 

/  4,R  31/3:103-17/PT.5 

Inplenentation  of  Indijn  Siniiig  Reg.-         HEAKIJNG- 

BEFORE  THE 

SUBCOMMITTEE  ON 
NATIVE  AMERICAN  AFFAIRS 

OF  THE 

COMMITTEE  ON 

NATURAL  RESOURCES 

HOUSE  OF  REPRESENTATIVES 

ONE  HUNDRED  THIRD  CONGRESS 

FIRST  SESSION 

ON 

IMPLEMENTATION  OF  PUBLIC  LAW  100-497,  THE  INDIAN  GAMING 
REGULATORY  ACT  OF  1988,  AND  RELATED  LAW  ENFORCEMENT  ISSUES 


HEARING  HELD  IN  WASHINGTON,  DC 
OCTOBER  5,  1993 


Serial  No.  103-17,  Part  V 


Printed  for  the  use  of  the  Committee  on  Natural  Resources 


IMPLEMENTATION  OF  INDIAN 
GAMING  REGULATORY  ACT 

OVERSIGHT  HEARING 

BEFORE  THE 

SUBCOMMITTEE  ON 
NATIVE  AMERICAN  AFFAIRS 

OF  THE 

COMMITTEE  ON 

NATURAL  RESOURCES 

HOUSE  OF  REPRESENTATIVES 

ONE  HUNDRED  THIRD  CONGRESS 

FIRST  SESSION 
ON 

IMPLEMENTATION  OF  PUBLIC  LAW  100-497,  THE  INDIAN  GAMING 
REGULATORY  ACT  OF  1988,  AND  RELATED  LAW  ENFORCEMENT  ISSUES 


HEARING  HELD  IN  WASHINGTON,  DC 
OCTOBER  5,  1993 


Serial  No.  103-17,  Part  V 


Printed  for  the  use  of  the  Committee  on  Natural  Resources 


U.S.   GOVERNMENT  PRINTING  OFFICE 
84-760  WASHINGTON  :  1994 

For  sale  by  the  U.S.  Government  Printing  Office 
Superintendent  of  Documents,  Congressional  Sales  Office,  Washington,  DC  20402 
ISBN  0-16-046382-3 


COMMITTEE  ON  NATTJRAL  RESOURCES 
GEORGE  MILLER,  California,  Chairman 


PHILIP  R.  SHARP,  Indiana 
EDWARD  J.  MARKEY,  Massachusetts 
AUSTIN  J.  MURPHY,  Pennsylvania 
NICK  JOE  RAHALL  II,  West  Virginia 
BRUCE  F.  VENTO,  Minnesota 
PAT  WILLIAMS,  Montana 
RON  DE  LUGO,  Virgin  Islands 
SAM  GEJDENSON,  Connecticut 
RICHARD  H.  LEHMAN,  California 
BILL  RICHARDSON,  New  Mexico 
PETER  A.  DeFAZIO,  Oregon 
ENI  F.H.  FALEOMAVAEGA,  American 

Samoa 
TIM  JOHNSON,  South  Dakota 
LARRY  1,aR0CC0,  Idaho 
NEIL  ABERCROMBIE,  Hawaii 
CALVIN  M.  DOOLEY,  CaUfornia 
CARLOS  ROMERO-BARCELO,  Puerto  Rico 
KARAN  ENGLISH,  Arizona 
KAREN  SHEPHERD,  Utah 
NATHAN  DEAL,  Georgia 
MAURICE  D.  HINCHEY,  New  York 
ROBERT  A.  UNDERWOOD,  Guam 
HOWARD  L.  BERMAN,  California 
LANE  EVANS,  lUinois 
PATSY  T.  MINK,  Hawaii 
THOMAS  J.  BARLOW  III,  Kentucky 
THOMAS  M.  BARRETT,  Wisconsin 


DON  YOUNG,  Alaska,  Ranking  Republican 

Member 
JAMES  V.  HANSEN,  Utah 
BARBARA  F.  VUCANOVICH,  Nevada 
ELTON  GALLEGLY,  CaUfornia 
ROBERT  F.  SMITH,  Oregon 
CRAIG  THOMAS,  Wyoming 
JOHN  J.  DUNCAN,  Jr.,  Tennessee 
JOEL  HEFLEY,  Colorado 
JOHN  T.  DOOLITTLE,  Cahfomia 
WAYNE  ALLARD,  Colorado 
RICHARD  H.  BAKER,  Louisiana 
KEN  CALVERT,  California 
SCOTT  McINNIS,  Colorado 
RICHARD  W.  POMBO,  California 
JAY  DICKEY,  Arkansas 


John  Lawrence,  Staff  Director 

Daniel  Weiss,  Professional  Staff  Member 

Richard  Meltzer,  General  Counsel 

Daniel  Val  Kish,  Republican  Staff  Director 


Subcommittee  on  Native  American  Affairs 

BILL  RICHARDSON,  New  Mexico,  Chairman 
PAT  WILLIAMS,  Montana  CRAIG  THOMAS,  Wyoming,  Ranking 

SAM  GEJDENSON,  Connecticut  Republican  Member 

ENI  F  H.  FALEOMAVAEGA,  American  DON  YOUNG,  Alaska 

Samoa  RICHARD  H.  BAKER,  Louisiana 

TIM  JOHNSON,  South  Dakota  KEN  CALVERT,  California 

NEIL  ABERCROMBIE,  Hawaii 
KARAN  ENGUSH,  Arizona 

Tadd  Johnson,  Staff  Director 
Marie  Howard,  Professional  Staff  Member 

Steven  J.W.  Heeley,  Counsel 

June  Lorenzo,  Professional  Staff  Member 

Barbara  Robles,  Clerk 

William  Johansen,  Staff  Assistant 

Richard  Houghton,  Republican  Counsel  on  Native  American  Affairs 


(II) 


CONTENTS 


Page 

Hearing  held:  October  5,  1993  1 

Charts  submitted  by  Mr.  Richardson: 

1.  Share  of  Gaming  HANDLE  for  Major  Types  of  Gaming,   1991  and 
J9g2  2 

2.  National  Gaming  ^\^N  for  Ms^^^^^^  1992 4 

3.  Share  of  Gaming  WIN  for  Major  Types  of  Gaming,  1991  and  1992  5 

Summary  of  Indian  Gaming  Regulatory  Act  9 

"Estimated  Financial  Trends  in  National  and  Indian  Gaming:  Tables  and 

Charts  for  a  Briefing  Book,"  compiled  by  Roger  Walke,  Analyst  in  American 

Indian  Policy,  Government  Division,  Congressional  Research  Service  13 

Member  statements: 

Hon.  BiU  Richardson  1 

Hon.  Craig  Thomas  32 

Hon.  Neil  Abercrombie  38 

Hon.  Ken  Calvert 38 

Hon.  Tim  Johnson  38 

Hon.  George  Miller  88 

Witness  statements: 

Hon.  Daniel  K.  Inoviye,  a  U.S.  Senator  from  the  State  of  Hawaii,  and 

Chairman,  Senate  Committee  on  Indian  Affairs 39 

Prepared  statement  of  Senator  Inouye 43 

Hon.  John  McCain,  a  U.S.  Senator  from  the  State  of  Arizona,  and  Vice 

Chairman,  Senate  Committee  on  Indian  Affairs 51 

Prepared  statement  of  Paul  L.  Maloney,  Senior  Counsel  for  Policy, 
Criminal  Division,  Department  of  Justice,  before  Select  Committee 

on  Indian  Affairs,  U.S.  Senate,  on  March  18,  1992  53 

Prepared  statement  of  Senator  McCain  62 

Hon.  WilUam  J.  Hughes,  a  Representative  in  Congress  from  the  State 

of  New  Jersey  66 

Prepared  statement  of  Representative  Hughes  70 

Hon.  Marge  Roukema,  a  Representative  in  Congress  from  the  State  of 

New  Jersey  77 

"Was  Mob  Behind  Tribe's  Casino,"  New  Jersey  Law  Journal,  Septem- 
ber 13,  1993 79 

Prepared  statement  of  Representative  Roukema  84 

Panel  consisting  of: 

Jim  E.  Moody,  Section  Chief,  Organized  Crime/Drug  Operations, 
Criminal  Investigative  Division,  Federal  Bureau  of  Investigation  ....      101 

F*repared  statement  of  Mr.  Moody  103 

Laurence  A.  Urgenson,  Acting  Deputy  Assistant  Attorney  General, 

Criminal  Division,  U.S.  Department  of  Justice 113 

Prepared  statement  of  Mr.  Urgenson  116 

David  B.  Palmer,  Deputy  Assistant  Commissioner  for  Criminal  Inves- 
tigation, Internal  Revenue  Service,  accompanied  by  Peter  G.  Djinis, 
Director,    Office   of  Financial   Management,    Department   of  the 

Treasury  126 

Prepared  statement  of  Mr.  Palmer 129 

Hon.  Robert  G.  Torricelli,  a  Representative  in  Congress  from  the  State 

of  New  Jersey  162 

Prepared  statement  of  Mr.  TorriceUi  165 

Donald   Trump,   Chairman  and   President,   Trump   Organization,   New 

York,  New  York 175 

Prepared  statement  of  Mr.  Trump 178 

(III) 


IV 

Page 

Witness  statements — Continued 

Donald  Trump,   Chairman  and   President,   Trump   Organization,   New 
York,  New  York— Continued 
Information  submitted  to  Chairman  Richardson  from  Mr.  Trump  by 

letter  dated  October  25,  1993  189 

Transcript  of  Imus  broadcast  243 

'Torricelli  gambUng  bill  a  prize-winning  insult"  article  248 

'The  wrong  way  to  fight  competition"  article  249 

Affidavit  of  Richard  M.  Milanovich,  Chairman,  Agua  Cahente  Band 

of  CahuiUa  Indians,  and  additional  documentation 253 

Panel  consisting  of: 

Hon.  Ada  E.  Deer,  Assistant  Secretary  of  Indian  Affairs,  Bureau 
of  Indian  Affairs,  U.S.  Department  of  the  Interior,  accompanied 
by  Hilda  A.  Manuel,  Director,  Indian  Gaming  Management  Staff, 

and  Theodore  R.  Quasula,  Chief,  Division  of  Law  Enforcement  270 

Prepared  statement  of  Ms.  Deer  272 

Hon.  Anthony  J.  Hope,  Chairman,  National  Indian  Gaming  Commis- 
sion        281 

Prepared  statement  of  Mr.  Hope  283 

Hon.  Joel  Frank,  Commissioner,  National  Indian  Gaming  Commis- 
sion   '. 302 

Michael  D.  Cox,  General  Counsel,  National  Indian  Gaming  Commis- 
sion, accompanied  by  Hon.  Jana  McKeag,  Commissioner 304 

Panel  consisting  of: 

Timothy  Wapato,  Executive  Director,  National  Indian  Gaming  Asso- 
ciation       308 

Information  regarding  alleged  incident  of  organized  crime  on 

Cabazon  Reservation  submitted  by  Mr.  Wapato 311 

Prepared  statement  of  Mr.  Wapato  315 

Richard  James  Elroy,  Retired  Special  Agent,  Federal  Bureau  of  In- 
vestigation        348 

Prepared  statement  of  Mr.  Elroy  351 

G.  Michael  Brown,  President  and  CEO,  Mashantucket  Pequot  Na- 
tion's Foxwoods  Casino  and  High  Stakes  Bingo,  Ledyard,  CT,  ac- 
companied by  Lt.  Col.  Robert  Root,  Connecticut  State  Police 354 

Prepared  statement  of  Mr.  Brown  357 

"The  Economic  Impacts  of  the  Foxwoods  High  Stakes  Bingo  & 
Casino  on  New  London  County  and  Siurounding  Areas"  and 

additional  attachments  to  Mr.  Brown's  testimony 367 

F.  William  Johnson,  CEO,  Mystic  Lake  Casino,  Shakopee  Sioux 
Tribe,  Prior  Lake,  MN,  accompanied  by  PoUce  Chief  Dick  Powell, 

City  of  Prior  Lake  Police  Department 444 

Prepared  statement  of  Mr.  Johnson  448 

APPENDIX 

October  5,  1993 

Additional  material  submitted  for  the  hearing  record  fi-om: 

Hon.  Donald  M.  Payne,  a  Representative  in  Congress  from  the  State 
of  New  Jersey:  Statement  of  support  for  the  Ramapough  Mountain 
Indian  Tribe 459 

Hon.  Benjamin  A.  Gilman,  a  Representative  in  Congress  from  the  State 
of  New  York:  Statement  of  support  for  the  Ramapough  Mountain  In- 
dian Tribe  460 

Seminole  Tribe  of  Florida:  Letter  to  Chairman  Richardson  from  Hon. 
James  E.  BilUe,  Chairman,  dated  October  13,  1993  462 

Chief  Ronald  "Redbone"  Van  Dunk,  Chief  of  the  Ramapough  Mountain 
Indians:  Prepared  statement  and  attachments  464 

George  L.  Schneider,  Counsel  to  the  Ramapough  Mountain  Indian  Tribe: 
Prepared  statement  474 

O'Connor  &  Hannan,  Attorneys  at  Law:  Letters  regarding  Indian  gaming 
and  Federal  taxation  ;■•      478 

National  Governors'  Association:  Letter  to  Senators  Inouye  and  McCain 
dated  August  17,  1993 485 


IMPLEMENTATION  OF  PUBLIC  LAW  100-497, 
THE  INDIAN  GAMING  REGULATORY  ACT  OF 
1988,  AND  RELATED  LAW  ENFORCEMENT  IS- 
SUES 


TUESDAY,  OCTOBER  5,  1993 

House  of  Representatives, 
Subcommittee  on  Native  American  Affairs, 

Committee  on  Natural  Resources, 

Washington,  DC. 
The  subcommittee  met,  pursuant  to  call,  at  9:35  a.m.,  in  room 
1324,   Longworth   House   Office   Building,   Hon.    Bill   Richardson 
(chairman  of  the  subcommittee),  presiding. 

STATEMENT  OF  HON.  BILL  RICHARDSON 

Mr.  Richardson.  The  committee  will  come  to  order. 

Today  we  are  taking  testimony  on  the  implementation  of  the  In- 
dian Gaming  Regulatory  Act  of  1988.  This  is  the  fifth  in  a  series 
of  oversight  hearings  the  subcommittee  has  conducted  on  this  sub- 
ject. 

I  have  asked  that  several  charts  be  prepared  for  the  committee 
by  the  Congressional  Research  Service  which  indicate  where  Indian 
gaming  stands  in  relation  to  other  types  of  legalized  gaming  na- 
tionally. 

[The  charts  follow:] 


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Mr.  Richardson.  Chart  one,  illustrated  as  a  pie,  indicates  the 
percentage  of  "handle."  "Handle"  means  the  total  of  all  wagers 
made.  This  is  the  money  which  is  bet  and  rebet  or  churned.  Each 
bet,  whether  the  house  wins  or  loses,  is  added  to  the  "handle."  Note 
that  Indian  gaming,  in  blue,  is  only  4.6  percent  of  the  "handle"  in 
the  country  while  Nevada  and  Atlantic  City-type  casinos  were  at 
76  percent  in  1992. 

Chart  2  shows  the  amount  of  "handle"  in  dollars.  In  1992,  non- 
Indian  casinos  went  over  $250  billion  in  "handle"  while  Indian 
gaming  establishments  were  around  $6  billion. 

Charts  3  and  4  show  the  concept  of  "win."  The  "win"  in  gambling 
means  the  revenues  which  go  to  the  gaming  facility  after  the  cus- 
tomer winnings  are  paid  out.  This  is  the  equivalent  to  a  non-gam- 
ing business's  gross  revenues. 

Chart  3  shows  that  lotteries  and  casinos  combined  made  in  ex- 
cess of  $20  billion  in  the  "win"  category  while  Indian  gaming  estab- 
lishments won  slightly  over  $1  billion  in  1992.  Again,  as  chart  4 
shows,  the  Indian  percentage  of  the  "win"  is  only  around  5  percent. 

Indian  gaming  is  governmental  gaming.  All  of  the  revenues  go 
back  into  the  reservations.  Many  other  types  of  gaming  on  these 
charts  are  for  profit. 

We  have  almost  100,000  Indians  homeless  or  underhoused.  Na- 
tive Americans  have  the  shortest  lifespan  and  the  highest  rates  of 
suicide,  tuberculosis,  and  diabetes.  We  have  an  unusual  interest  in 
this  hearing,  and  in  the  efforts  of  speeding  up  the  proceedings,  I 
am  going  to  insert  into  the  record  my  statement  and  background 
information  and  urge  that  our  opening  statements  be  relatively  of 
short  duration. 

[The  prepared  statement  of  Mr.  Richardson  and  additional  infor- 
mation follow:] 


OPENING  STATEMENT  OF  CHAIRMAN  RICHARDSON 
October  5,  1993 


The  Committee  will  come  to  order. 

Today  we  are  taking  testimony  on  the  implementation  of  the  Indian  Gaming 
Regulatory  Act  of  1988.  This  is  the  5th  in  the  series  of  oversight  hearings  the  Subcommittee 
has  conducted  on  this  subject. 

I  have  asked  that  several  charu  have  been  prepared  for  the  Committee  by  the 
Congressional  Research  Service  which  indicate  where  Indian  Gaming  stands  in  relation  to 
other  types  of  legalized  gaming  nationally. 

Chart  One,  illustrated  as  a  pie,  indicates  the  percentage  of  "handle".  "Handle"  means 
the  total  of  all  wagers  made.  This  is  the  money  which  is  bet  and  rebet  or  "churned".  Each 
bet,  whether  the  house  wins  or  loses,  is  added  to  the  "handle".  Note  that  Indian  gaming,  in 
blue,  is  only  4.6%  of  the  handle  in  the  country  whOe  Nevada  and  Atlantic  Qty  type  casinos 
were  at  76%  in  1992.  Chart  Two  shows  the  anaount  o(  "handle"  in  dollars.  In  1992  non- 
Indian  casinos  went  over  $250  billion  in  handle  while  Indian  gaming  establishments  were 
around  $6  billion. 

Charts  three  and  four  show  the  ccmcept  oi  "win".  The  "win"  in  gambling  m^an^  the 
revenues  which  go  to  the  gaming  facility  after  the  custraner  winnings  are  paid  out  This  is 
the  equivalent  to  a  non-gaming  businesses  "gross  revenues".  Chart  Three  shows  that  k}tteries 
and  casinos  ctmbined  made  in  excess  of  $20  btSion  in  the  "win"  categoiy  while  Indian 
gaming  establishments  "won"  less  slightly  over  $1  biOicn  in  1992.  Again,  as  Chart  Four 
shows,  the  Indian  percentage  of  the  win  is  only  around  S%. 

Indian  gaming  is  governmental  gaming.  AH  of  the  revenues  go  back  into  the 
reservations.  Many  of  the  other  types  of  gaming  on  uiese  charts  are  fcM'  profit 

Indian  gaming  is  a  desperate  remedy  f(v  a  desperate  situation.  Abnost  100,000 
Indians  are  homeless  or  underboused.  Indians  have  the  shortest  life  span  and  the  highest 
rates  of  suicide,  tubercukxis  and  diabetes.  Over  half  (rf  the  pec^le  on  reservations  are 
unempkiyed. 

On  maiy  tcservatioas,  Indian  gaming  has  been  a  way  out  of  the  w(»st  poverty  in  our 
nation.  The  guniaf  revenues  are  mandated  to  go  back  into  governmental  programs  to 
benefit  the  Indiu  people.  On  the  MiUe  Lacs  Reservation  m  Minnesota  last  week,  a  new 
school  was  opened.  The  school  was  buih  with  gaming  dollars  and  not  ckk  penny  of  federal 
govenmient  awistance.  This  is  what  the  Act  was  meant  to  da  Tnrfian  tribes  are 
experiencing  a  new  hope  for  the  future,  and  a  new  hope  ttriiicfa  they  have  not  felt  in  decades 
or  even  centuries. 


Many  voices  speak  out  vehemently  against  Indian  gaming,  but  as  a  tribal  leader  told 
me  recently,  "no  one  ever  objected  to  the  Indians  being  poor". 

Today  we  will  discuss  law  enforcement  issues  in  Indian  gaming.  There  has  been  a 
hysteria  surrounding  Indian  gaming  from  the  begiiming.  There  have  been  allegations  of 
organized  crime  and  money  laundering  rampant  on  reservations.  Today,  we  will  hear  from 
the  law  enforcement  agencies  charged  with  regulating  Indian  gaming  and  enforcing  federal 
laws  on  the  reservations.  We  will  also  hear  from  tribal  witnesses  and  private  parties  to  get 
their  perspectives  on  law  enforcement  issues  in  Indian  gaming. 

This  Subcommittee  is  committed  to  seeking  the  truth  on  these  matters.  These 
allegations  are  quite  significant  and  the  Committee  takes  its  oversight  responsibilities  very 
seriously.  If  there  is  criminal  activity  in  these  gaining  operationt,  we  need  to  know  about 
it  and  actively  work  to  put  a  stop  to  it  If  the  level  of  criminal  activity  is  not  at  serious  as 
some  allege,  we  must  work  to  ensure  that  this  industry  is  weQ  regulated  and  the  criminal 
elements  are  kept  in  check.  But  we  must  begin  by  asking  the  questions  •  which  is  our 
purpose  today. 


SUMMARY  OF  THE  INDIAN  GAMING  REGULATORY  ACT 

On  October  17,  1988,  the  President  signed  into  law  the  Indian 
Gaming  Regulatory  Act,  Public  Law  100-497,  25  U.S.C.  2701  et  sea. 
The  Act  provides  a  system  for  the  regulation  of  gaming  on  Indian 
lands  by  dividing  gaming  into  three  classes,  establishing  the 
National  Indian  Gaming  Commission  to  regulate  Class  II  gaming  and 
authorizing  compacts  between  tribes  and  states  for  the  regulation 
of  Class  III  gaming. 

Class  I  Gaming 

Class  I  gaming  includes  social  or  traditional  gaming  which  is 
played  in  connection  with  tribal  ceremonies  or  celebrations.  Class 
I  gaming  is  regulated  exclusively  by  the  tribes. 

Class  II  Gaming 

Class  II  gaming  includes  bingo  and,  if  played  at  the  same 
location  as  bingo,  pull  tabs,  lotto,  punch  boards,  tip  jars,  and 
instant  bingo.  Class  II  gaming  also  includes  card  games  which  are 
authorized  by  state  law  or  not  explicitly  prohibited  by  state  law 
and  played  at  any  location  in  the  state.  The  card  games  must  be 
played  in  conformity  with  state  law  or  regulations  regarding  hours 
of  operation  and  pot  limits. 

A  tribe  may  engage  in  Class  II  gaming  if  the  state  in  which 
the  tribe  is  located  permits  such  gaming  for  any  purpose  by  any 
person,  organization  or  entity.  Class  II  geiming  is  regulated  by 
the  National  Indian  Gaming  Commission  and  the  tribe  or  solely  by 
the  tribe  if  issued  a  certificate  of  self -regulation. 

Class  III  Gaming 

Class  III  gaming  includes  all  gaming  not  included  in  Class  I 
or  Class  II,  such  as  casino-type  games,  gambling  devices,  pari- 
mutuel  betting,  etc. 

Class  III  gaming  is  prohibited  unless  authorized  by  a  tribal- 
state  compact. 

Class  III  Gaming  and  Tribal-State  Compacts 

Class  III  gaming  is  lawful  when  it  is  authorized  by  a  tribal 
ordinance  approved  by  the  chairman  of  the  Commission,  is  located  in 
a  state  that  permits  such  gaming  (whether  for  charitable, 
conunercial,  or  governmental  purposes),  and  is  conducted  in 
conformance  with  a  tribal-state  compact  which  has  been  approved  by 
the  Secretary  of  the  Interior. 

The  Act  authorizes  an  Indian  tribe  and  the  state  in  which  the 
tribe  is  located  to  enter  a  compact  governing  gaming  activities. 
The  compact  may  include  provisions  concerning:  the  application  of 


10 


tribal  or  state  criminal  and  civil  laws  directly  related  to  gaming, 
the  allocation  of  jurisdiction  between  the  state  and  the  tribe, 
state  assessments  to  defray  the  costs  of  regulating  the  activity, 
taxation  by  the  tribe  in  amounts  comparable  to  state  taxation, 
remedies  for  breach  of  contract,  standards  for  the  operation  and 
maintenance  of  the  gaming  facility,  and  any  other  subjects  related 
to  the  gaming  activity. 

The  state  is  not  authorized  to  impose  a  tax  or  assessment 
(except  assessments  that  are  agreed  to)  upon  a  tribe  or  person 
authorized  by  a  tribe  to  conduct  a  gaming  activity.  The  state 
cannot  refuse  to  negotiate  a  compact  based  on  its  inability  to 
impose  a  tax,  fee,  or  other  assessment. 

The  federal  districts  courts  are  vested  with  jurisdiction 
over:  actions  by  Indian  tribes  arising  from  the  failure  of  a  state 
to  negotiate  with  a  tribe  seeking  to  enter  a  compact  or  to 
negotiate  in  good  faith,  any  action  by  a  state  or  tribe  to  enjoin 
a  Class  III  activity  which  violates  the  tribal-state  compact. 

A  tribe  may  initiate  an  action  for  failure  to  negotiate  in 
good  faith  against  a  state  only  after  the  passage  of  180  days  from 
the  date  the  tribe  requested  the  state  to  enter  negotiations  for  a 
compact.  If  the  court  finds  that  the  tribe  has  failed  to  negotiate 
in  good  faith,  it  shall  order  the  state  and  the  tribe  to  conclude 
a  compact  within  60  days. 

If  the  state  and  the  tribe  fail  to  conclude  a  compact  within 
the  60-day  period,  the  parties  are  to  submit  a  court-appointed 
mediator  their  last  best  offers  for  a  compact. 

The  Secretary  of  the  Interior  is  authorized  to  approve  tribal- 
state  compacts.  The  Secretary  may  disapprove  a  compact  if  it 
violates:  the  Act,  any  other  federal  law  that  does  not  relate  to 
jurisdiction  over  Indian  gaming,  or  the  trust  obligations  of  the 
United  States  to  Indians.  The  compact  takes  effect  once  the 
Secretary  publishes  a  notice  in  the  Federal  Register  that  the 
compact  has  been  approved. 

Gaming  on  Indian  Lands  after  Enactment 

Gaming  is  prohibited  on  land  acquired  by  the  Secretary  in 
trust  for  an  Indian  tribe  after  the  date  of  enactment  of  the  Act 
unless:  (1)  the  land  is  within  or  contiguous  to  the  tribe's 
existing  reservation  boundaries;  or  (2)  if  an  Oklahoma  tribe,  the 
lands  are  within  the  tribe's  former  reservation  or  the  lands  are 
contiguous  to  other  land  held  in  trust  or  restricted  status  for 
that  tribe.  This  prohibition  does  not  apply  if  the  Secretary 
determines  that  a  gaming  facility  would  be  in  the  best  interests  of 
the  tribe  and  its  members  and  would  not  be  detrimental  to  the  local 
community  and  the  governor  of  the  state  concurs  with  the 
Secretary's  determination.  This  prohibition  also  does  not  apply  to 


11 


lands:   taken  in  trust  as  part  of  a  settlement  of  a  land  claim, 

comprising   the   initial  reservation   of   a   tribe   federally 

acknowledged,  or  restored  to  a  tribe  that  has  been  restored  to 
federal  recognition. 

National  Indian  Gaming  Commission 
Composition 

The  Commission  is  composed  of  three  full-time  members  with  the 
Chairman  appointed  by  the  President  and  the  other  two  members 
appointed  by  the  Secretary  of  the  Interior.  Two  of  the  three 
Commissioners  must  be  members  of  federally  recognized  Indian  tribes 
and  no  more  than  two  members  can  be  of  the  same  political  party. 
The  Chairman  of  the  Commission  is  Anthony  J.  Hope.  The  two 
Commissioners  are  Jana  McKeag  and  Joel  Frank. 

Powers  of  Chairman 

The  Chairman  is  empowered  to:  (1)  issue  temporary  closure 
orders;  (2)  levy  civil  fines;  (3)  approve  tribal  gaming  ordinances; 
and  (4)  approve  management  contracts.  The  Chairman  is  also  vested 
with  such  powers  as  the  Commission  may  delegate. 

Powers  of  the  Commission 

The  Commission  is  vested  with  the  following  powers  which 
cannot  be  delegated:  (1)  approve  the  annual  budget;  (2)  adopt 
regulations  for  civil  fines;  (3)  adopt  an  annual  schedule  of  fees; 
(4)  authorize  Chairman  to  issue  subpoenas;  and  (5)  permanently 
close  a  gaming  activity. 

The  Commission  is  vested  with  the  following  additional  powers: 
(1)  monitor  gaming  activities;  (2)  inspect  gaming  premises;  (3) 
conduct  background  investigations;  (4)  inspect  records  related  to 
gaming;  (5)  use  the  U.S.  mails;  (6)  procure  supplies;  (7)  enter 
into  contracts;  (8)  hold  hearings;  (9)  administer  oaths,  and  (10) 
promulgate  regulations. 

Tribal  Self -Regulation 

A  tribe  may  petition  the  Commission  for  a  certificate  of  self- 
regulation  if  it  has  been  engaged  in  a  Class  II  activity 
continuously  for  a  three-year  period  with  at  least  one  of  the  years 
being  after  the  date  of  enactment  of  the  Act  and  has  otherwise 
complied  with  the  Act;  The  Commission  may  issue  the  certificate  if 
it  is  satisfied  that  the  tribe  has: 

(1)  conducted  the  gaming  activity  in  a  manner  that  has 
resulted  in  an  honest  accounting  of  all  revenues,  has  a  reputation 
for  a  safe  and  honest  operation,  and  is  generally  free  of  evidence 
of  criminal  or  dishonest  activity; 


12 


(2)  adopted  and  is  implementing  an  adequate  system  for: 
accounting  of  revenues,  investigation,  licensing,  and  monitoring  of 
employees,  and  investigation,  enforcement,  and  prosecution  for 
violations  of  its  gaming  laws;  and 

(3)  conducted  the  gaming  activity  on  a  fiscally  sound  basis. 

Management  Contracts 

The  Chairman  may  approve  a  management  contract  if  it  provides: 
(1)  adequate  accounting  procedures;  (2)  access  by  tribal  officials 
to  the  gaming  operations  in  order  to  verify  the  daily  gross 
revenues  and  income;  (3)  a  minimum  guaranteed  payment  to  the  tribe 
that  has  preference  over  the  retirement  of  development  and 
construction  costs;  (4)  a  ceiling  for  the  repayment  of  such  costs; 

(5)  a  maximum  term  of  5  years  or,  at  tribal  request,  7  years;  and 

(6)  grounds  and  procedures  for  terminating  the  contract. 

The  management  fee  cannot  exceed  30  percent  of  the  net 
revenues  unless  the  tribe  requests  a  higher  percentage.  The 
Chairman  may  approve  a  higher  percentage,  not  to  exceed  40  percent, 
if  a  higher  percentage  is  justified  based  on  the  capital  investment 
and  projected  income. 

All  existing  ordinances  and  management  contracts,  whether  or 
not  approved  by  the  Secretary,  must  be  submitted  to  the  Chairman. 

Commission  Funding 

The  Commission  is  authorized  to  assess  each  gaune  a  fee  which 
is  based  on  a  sliding  fee  scale  from  one-half  of  one  percent  to  two 
and  one-half  percent  on  the  first  $1,500,000  of  gross  revenues  and 
up  to  five  percent  of  amounts  over  $1,500,000.  The  total  amount  of 
fees  which  the  Commission  can  assess  in  any  fiscal  year  is  limited 
to  $1,500,000.  The  Commission  is  authorized  to  request 
appropriations  in  an  amount  equal  to  the  annual  assessment. 
Section  8.  Thus,  the  commission's  annual  budget  cannot  exceed 
$3,000,000  ($1,500,000  from  assessments  and  $1,500,000  from 
appropriations) .  There  is  authorized  to  be  appropriated  in  an 
amount  not  to  exceed  $2,000,000  for  the  first  fiscal  year. 


13 


CRS 


Congressional  Research  Service  •  The  Library  of  Congress  •  Washington,  D.C.  20540-7000 


ESTIMATED  FINANCIAL  TRENDS  IN 
NATIONAL  AND  INDIAN  GAMING: 
Tables  and  Charts  for  a  Briefing  Book 


Compiled  by  Roger  Walke 

Analyst  in  American  Indian  Policy 

Government  Division 

October  4,  1993 


14 


Table  1.  Estimated  National  Legal  Gaining  HANDLE  ('Churned'  Dollars),  by  Type  of  Gaming, 

1982-1992 

1M2 ie«3 IM4 U» I9M IM7 


P«in 


Hono  -  Tnck 
Hones -OTB 
Horac*  -  Subtotal 
Gnyhounds  -  Track 
Gnyhouoda  -  0TB 
Greyhounds  -  Subtoul 

Toul  •  Perifliutuele 
Loltenes 

All  Other  Guno 

Video  Lotteries 
Totsl  -  Lotteries 
Cesinoe 

SV/SJ  Slot  Mschlnes 

NV/NJ  Tebie  Guses 

Cruise  Ships 

Rjverbosts 

Other  Commert:ieJ 
Ceeinos- 


»9.990.62«,S72 
»l.707^1.903 
>II.697.900.47S 
S2J08.S61.89S 

I2J08.561.898 

J622.7S2.3KI 

I14.629.2».73« 


M.  088.300.000 


si4.400.ooo.oaa 

S87.0O0.0Oa.0O0 


$9,932,179,428 
S1.71S.986.659 
Sll.S48.166.aS6 
S2.326.S46.934 
SS61.369 
S2.326.39S.303 
S619.8a4.39l 
$14,694,367,779 


S  18.800.000.000 
SS7JO0.0OO.0Oa 


SI0.417.6l!k.960 
Sl.766.4S2.79a 
$12,183,071,760 
$2,461,386,761 
$e.631.S4S 
$2,466,917,699 
$666,869,006 
$16,306,868,366 


$23,792,860,563 
S92.86S.783. 646 


$10,486,397,644 
S1.763.S60.97S 
$12J40.248.622 
$2,698,934,362 
$4,423,618 
$2,703,367,980 
S663.96SJ72 
$16,607,574,774 


$10,481,686,728 
$1,938,990,563 
$12.420.67ej91 
$3,009,193,413 
$9,420  J61 
$3.0 18.5 13.664 
$667,575,369 
$16,106,866,324 


$26,182,148,083 
S99.557.639.436 


$28,503,598,369 
$101,438,240,164 


$11,007,987,415 
$2,104,253,896 
$13.112241.310 
$3,190,892,997 
$12,428,724 
$3,203,321,721 
$707,507,464 
$17,023,070,495 


$8,132,600,000  $10,213,260,000  $12,479,720,000  $13,140,292,000 


S3Z794J63,961 
$112,043,911,391 


Total  •  Cesinoe 
Legal  Bookmaking 

Sportsbooks 

Horaebooks 

Total  -  Legal  Bookmeking 

Canl  Rooms 

Bingo  (other  than  on 
Indian  reservations] 

Chantable  Games 

Indian  ITsssi  islloHS 

Class  n 

Class  m 
Total  —  ladUn  Ras. 
TOTAL  LEGAL 


$101,400,000,000         $106,000,000,000         $I16.661.644J0S         $126,739,667,619  $129,941,836,623  $144,838,166,342 


$416,161,891  $692,019,766  S929.114.79S  $886,867,210 

$122,800,048  $160,326,188  S1S4.367232  $243,249,092 

$637,970,939  SS62344.944  $1,113,482,030  Sl.129.106.302 

$1,000,000,000  $1,062,000,000  Sl.066.000.000  $1,096,960,000 

$3,000,000,000  S3.070.0Oa.0OO  $3,164,118,000  $3,437,988,620 

$1200.000.000  $1,400,000,000  $1,640,000,000  $1,681,680,000 


$126,766,506,675 


—  —  $250,000,000 

$132,139,912,723        $146,972,602,693        $169.166267216 


$898,939,394  Sl.014.319.728 

$290. 180.529  $366,564,366 

$1,189,119,923  $1,379,884,084 

$1,118,889,000  $3,125,000,000 

$3,599,574,086  $3,977,169,407 


$1,789,307,520 


$286,714,286 
$166,611,028,661 


S2.0O2. 960.838 


$314JS6.714 
$186,800,817,880 


Sourt:e:    Annual  estimates  prepared  by  ChristiansenyCununin^  Assocdates,  Inc.,  for  Gaming  &  Wagering  Business 

magazine's  July  15-S«pt.  14  issues,  1989-1993.    Most  recently  revised  figures  used. 
Notes:      •     "Other  Commertnal  Casinos"  includes  all  commercial  land -based  casinos  that  are  not  in  Nevatla  or  New  Jersey 

and  are  not  on  Indian  reservations.    Examples  of  such  casinos  are  those  in  Deadwood,  SD,  and  in  certain  towns  in 

Colorado. 

••    "Non-Casino  Gaming  Devices"  includes  gaming  devices  in  State-regulated  non-casino  establishments  such  as 

bars,  restaurants,  stores,  etc. 

OTB  =  Off-Track  Bettmg 


15 


Table  1.  Estimated  National  Legal  Gaming  HANDLE  ('Churned'  Dollars),  by  Type  of  Gaming, 

1982-1992 


PanmuluelB 

Hocaf  ■  Track 
Hoi»>  .  OTB 
Horses  -  SubtoUj 
Greyhounds  -  Trmck 
Greyhounds  -  OTB 
Gniyhounds  -  Subtotal 
Jsi-alai 

ToUl  -  Psximutuels 

All  Other  Games 
Video  Lotteries 
Total  -  Lotteries 

NV/NJ  Slot  Machines 

NV/NJ  Table  Games 

Cnjise  Ships 

Riverboata 

Other  Commercial* 

Non-Casino  Devices** 
Total  -  Casino* 
Legal  Bookmaking 

Sporlabooka 

Horsefaooks 
Total  •  Legal  Bookmaking 
Card  Rooms 


til. 181.073.866 
IZ487.088.e21 
SI3.668. 162.387 
83.246.422,210 
$16.SS0.28S 
$3,262,972,496 
$639,224,435 
$17,570,369,317 


$10,312,606,882 
$3,417,069,719 
$13,929,576,601 
$3,183,112,602 
$28,571,564 
$3,211,684,166 
$552,746,477 
$17,694,007,244 


$17,051,880,000  $19,488,330,000 

$67,667,092,665  $65,790,588,454 

$126,295,623,085         $127,774,754,003 

$1,762,500,000 

$23,141,217 

$230,000,000  $249,874,874 

$184,192,716,740         $195,600,858,548 

$1,317,304,075  $1,434,952,978 

$414,563,172  $403,178,763 

$1,731,867,247  $1,838,131,741 

$3,453,125,000  $7,564,918,000 

$3,670,167,867  $3,794,482,916 


$10,414,964,557 
$3,721,698,942 
$14,136,653,499 
$3,438,744,803 
$26,886,215 
$3,466,631,018 
$666,627,881 
$18,157,912,398 


$9,863,556,679 
$4,028,593,038 
$13,892,149,717 
$3,463,487,796 
$38,898,771 
$3,602,386,567 
$488,368,157 
$17,882,904,441 


$20,734,834,000  $20,678,640,000 

$281,946,000  $354,842,000 

$21,016,780,000  $20,933,482,000 


$76,166,608,629 

$161,638,696,232 

$3,708,296,000 

$3»4,S67,261 

$306,800,000 

$242,204,966,122 


$84,398,462,227 

$149,744,002,493 

$4,076,676,000 

$1,099,431,461 

$771,022,759 

$363,603,126 

$240,463,097,066 


$1,672,279,393  $1,871,063,086 

$483,530,637  $392,124,903 

$2,156,810,530  $2,263,187,989 

$8,378,107,000  $8,399,639,000 

$4,071,613,000  $4,230,164,000 


$9,633,550,092 
$4,677,706,686 
$14,111,265,778 
$3,242,150,864 
$62,229,466 
$3,304,380,320 
$426,890,129 
$17,841,526,227 

$23,036,474,000 
$1,326,363,000 
$24,361,827,000 

$94,567,329,008 

$143,100,618,577 

$4,280,608,760 

$7,319,681,198 

$3,078,234,749 

$667,447,916 

$262,893,820,498 

$1,800,782,918 
$307,612,279 
$2,108,296,197 
$8,428,086,000 
$4,306,214,000 


Charitable  Gamta 
Indian  Resarvations 

Class  n 

Class  m 
Total  —  Indian  Raa. 
TOTAL  LEGAL 


$3,581,133,231  $4,222,352,352  $4,467,407,000  $4,606,898,000 


$1,294,000,000  $1,397,500,000 

$1,346,100,000  $4,038,260,000 

$2,640,100,000  $6,435,760,000 

$303,092,696,050  $304,204,122,486 


$345,714,286  $1,000,000,000 

$231,596,962,688        $251,203,080,800 


$4.774.84 1  000 

$1,430,000,000 
$13,744,500,000 
$15,174,600,000 
$329,889,108,922 


Annual  estimates  preparetl  by  ChhstiansenyCtimmings  Associates,  Inc..  for  G<xming  &  Wagering  Business  magazine's 

July  15-Sept.  14  issues,  1989-1992,  and  July  15-Aug.  14,  1993,  issue.   Most  recently  revised  figures  used. 

*    "Other  Commercial  Casinos"  includes  all  commennal  land-based  casinos  that  are  not  in  Nevatla  or  New  Jersey  and 

are  not  on  Indian  reservations.    Examples  of  such  casinos  are  those  in  Deadwood,  SD,  and  in  certain  towns  in 

Colorado. 

••  "Non-Casino  Gaming  Devices"  includes  gaining  devices  in  State-regulated  non-casino  establishments  such  as  bars, 

restatirants,  stores,  etc. 

OTB  =  Off-Track  Betting 


16 


Table  2.   Changea  In  National  Legal  Gaming  HANDLE  ("Churned'  Dollars),  by  Type  of  Gaming, 
1982-1992  and  1985-1992 


Overall         Average  Annual 

Percent  Change:        Percent  Change: 

1982  to  1992  1982  to  1992 


Overall  Average  Annual 

Percent  Change:  Percent  Change: 

1985  (or  later  1985  (or  later 

year)  to  1992  year)  to  1992 


PwinutueU 
Mono  ■  Tnck 
Hono    OTB 
HonM  -  Subtoul 
Greyhouoda  •  Track 
Grayhounda  •  OTB 
Greybounda  •  Subtotal 

Total  •  Panmutuola 

AU  Other  Canca 
Video  Lotteriee 
Total  ■  Lotteriee 

NV/NJ  Slot  Machlnee 
NV/NJ  Table  Ganiee 
Cruiae  Shipe 

Other  Commercial  Caainoe* 

Non-Caeino  Gaming  Devices*' 
Total  •  Caaioee 
Legal  Bootrmelring 

Sportebooka 

Hotvebooka 

Total  -  Legal  Bookntakiog 

Card  Rooma 

Bingo  (other  than  on  Indian 
leaervational 

Charitable  Gamea 

Indian  Raeei  laUona 

CUaan 

Claaain 
ToUl  —  Indian  Rm. 
TOTAL  LEGAL 


IM  I3« 

20.63% 

46.10% 

11.106.36% 

49.62% 
.0161% 

22-80% 


SS6  66% 
64.40% 


333.7S% 
150.40% 
291.90% 
742.61% 
43.S4% 

297.90% 


162.33% 


-0.47% 

-9.09% 

10.37% 

161.01% 

1.89% 

16.29% 

3.91% 

20-13% 

69.07% 

1.306.75% 

4.11% 

22.23% 

■3.73% 

-35.86% 

207% 

14  31% 

_ 

11  10% 

- 

370.43% 

19.54% 

138  53% 

20.71% 

261.16% 

5.10% 

43.74% 

- 

14287% 

- 

566.77% 

- 

13.201.96% 

- 

14237% 

9.67% 

101.12% 

15.30% 

103^8% 

9.61% 

26.42% 

14.64% 

86,72% 

23.76% 

668.32% 

36«% 

26.26% 

10.51% 

921.06% 

6.969.80% 

107  jn% 


■136% 
14.69% 

2.05% 

2.66% 
46.89% 

2.91% 
•S.15% 

1.93% 

6.40% 
1 16  89% 
13.22% 

20  14% 
5.32% 

34  42% 
666.77% 
410.47% 

24.77% 

10,50% 

10.67% 
3,41% 
9-33% 

33.82% 
321% 

16  08% 

6.12% 
21964% 
79.78% 
10.97% 


Source:  Calculated  by  CRS  from  annual  estimates  prepared  by  Cbristiansen/Cummings  Associates,  Inc.  for  Gaming  & 

Wagenng  Business  magazue's  July  15-Sept.  14  issues,  1989-1993.    Most  recently  revised  figures  used. 
Notes:    *    "Other  Commerciai  Casinos'  includes  all  cnmmerdal  land-based  casinos  that  are  not  in  Nevada  or  New  Jersey  and 

are  not  on  Indian  reservations.    Examples  of  such  casinos  are  those  m  Deadwood,  SO,  and  in  certain  towns  in 

Colorado. 

••  "Non-Casmo  Gaming  Devices"  mcludes  gaming  devices  in  State-regulated  non-casino  establishments  such  as  bars, 

restaurants,  stores,  etc 

OTB  =  Off-Track  Betting 


17 


Table  3.  Each  Gaming  Type's  Share  of  National  Legal  Gaming  HANDLE  CChumed"  Dollars).  1982-1992 
~~^~  1982      1983      1984      1985      liie      1987      lisi       1989      1990      1991      1992 


Panmutuels 

Horses  •  Track 
Horses  -  0TB 
Horses  -  Subtotal 
Greyhounds  -  Track 
Greyhounds  -  0TB 
Greyhounds  -  Subtotal 
Jai-alai 

Total  -  Parimutuels 

Total  -  Lotteries 

Casinos 

NV/NJ  Slot  Machines 
NV/NJ  Table  Games 
Cruise  Ships 
Riverboats 
Other  Commercial 
Non-Casino  Devices 

Total  -  Casinos 

Legal  Bookmaking 
Sportsbooks 
Horsebooks 

Total  -  Legal  Bookmaking 

Card  Rooms 

Bingo  [other  than  on  Indian 

reservations] 

Charitable  Gaines 

Total  —  Indian 

Reservations 

TOTAL  LEGAL 


7.94%  7.52%  7.09% 

1.36%  1.30%  1.20% 

9.30%  8.82%  8.29% 

1.76%  1.76%  1.67% 

1.76%  1.76%  1.67% 

0,50%  0.47%  0.45% 

11.55%  11.04%  10.41% 

3.25%  3.91%  5.53% 


11.45%  14.23%  16.19%  16.45%  17.12%  17.65%  24.90%  26.19%  25.13%  27.74%  28.66% 

69.18%  65.99%  63.19%  62.55%  60.92%  60.30%  54.53%  50.87%  53.33%  49.23%  43  38% 

—  —  —  —  —  —            —  0.70%  1.22%  1.34%  1.30% 

—  —  —  —  —  —            —  —  —  0.36%  2.22% 

—  —  —  —  —  —            —  0.01%  0.13%  0.25%  0.93% 

—  —  —  —  —  —           0.10%  0.10%  0.10%  0.12%  0.17% 
80.63%  80.22%  79.38%  79.00%  78.04%  77.95%  79,53%  77.87%  79.91%  79.04%  76.66% 


6.59% 

6.29% 

5.92% 

4.83% 

4.18% 

3.44% 

3.24% 

2.89% 

1.10% 

1.16% 

1.13% 

L07% 

1.36% 

L23% 

1.32% 

1.39% 

7.69% 

7.46% 

7.06% 

5.90% 

5.55% 

4.66% 

4.57% 

4.28% 

1.70% 

1.81% 

1.72% 

1.40% 

1.27% 

1.13% 

1.14% 

0.98% 

— 

0.01% 

0.01% 

0.01% 

0.01% 

0.01% 

0.01% 

0.02% 

1.70% 

1.81% 

1.72% 

1.41% 

1.28% 

1.14% 

1.15% 

1.00% 

0.42% 

0.40% 

0.38% 

0.28% 

0.22% 

0.18% 

0.16% 

0.13% 

9.81% 

9.67% 

9.16% 

7.59% 

7.04% 

5.99% 

5.88% 

5.41% 

6.42% 

7.49% 

7.07% 

7.36% 

7.76% 

6.93% 

6.88% 

7.38% 

0.33% 

0.52% 

0.63% 

0.56% 

0.54% 

0.10% 

0.12% 

0.13% 

0.15% 

0.17% 

0.43% 

0.65% 

0.76% 

0.71% 

0.71% 

0.80% 

0.80% 

0.72% 

0.69% 

0.67% 

2.39% 

2.32% 

2.15% 

2.16% 

2.16% 

0.95%       1.06%       1.05% 


0.55%  0.57%  0.57% 

0.20%  0.18%  0.16% 

0.74%  0.75%  0.73% 

1.68%  1.49%  3.01% 

il4%  1.58%  L51% 

1.06%       1.07%       1.08%  1.55%  1.68% 

0.16%      0.17%      0.17%  0.15%  0.40% 


0.55%  0.62%  0.55% 

0.16%  0.13%  0.09% 

0.71%  0.74%  0.64% 

2.76%  276%  2.55% 

1.34%  L39%  L31% 

1.47%  1.51%  1.45% 

0.87%  L79%  4.60% 


100.0%     100.0%     1000%     100.0%     100.0%    100.0%     100.0%     100.0%     100.0%    100.0%    100.0% 


Source:        Calculated  by  CRS  from  annual  estimates  prepared  by  Christiansen/Cummin^  Associates,  Inc.,  for  Gaming  &  Wagering 

Business  magazine's  July  15-Sept.  14  issues,  1989-1993.   Most  recently  revised  figures  used. 
Notes:         •     "Other  Commercial  Casinos"  includes  all  commercial  land-based  casinos  that  are  not  in  Nevada  or  New  Jersey  and 

are  not  on  Indian  reservations.  Examples  of  such  casinos  are  those  in  Deadwood,  SD,  and  in  certain  towns  in  Colorado. 

••    "Non-Casino  Gaming  Devices"  includes  gaming  devices  in  State-regulated  non-casino  establishments  such  as  bars, 

restaurants,  stores,  etc. 

OTB  =  Off-Track  Betting 


18 


Table  4.   Estimated  National  Legal  Gaming  WIN  (Gross  Revenues),  by  Type  of  Gaining, 

1982-1992 


PtnmutueU 

Hono     Trmck 
Hoim     OTB 
HorwM  ■  SubloUi 
Gnyhound*  •  Track 
Grayhounds  -  OTB 
Gnylwund*  -  SubtouJ 

ToUl  —  Puimulueb 
Lotteries 

All  Other  Gemcs 

Video  LoUerio 
ToleJ  —  Lotuna 

NV/NJ  Slot  Meohino 
NV/NJ  Table  Gemee 
Cniiee  Shipe 
Rjverboela 


SI.S6O.00a,000 
(400.000.000 

lZ2M.ooo,ooa 
S430.ooo.oao 

(430,000.000 

1112.000.000 

S2. 792.000.000 


S1.867.3IS.000 
S40 1.640.644 

S2.25S.8SS.644 

S4&3.&40.152 

SO 

S4U.S40.162 

S11I.S64.790 

S2.S23.963.S86 


S1.94S.089. 136 
S40S.9I6.009 

S2.357.005. 145 

S47S.020.221 

Sl.OSI.OSl 

S479.071.272 

S122.090.OI2 

S2.958. 166.429 


SI.980.8S0.496 
S409.267.26S 

S2.390. 147.764 

S626.292.201 

$640,487 

S627.132.GS8 

S129.3S4.980 

S3.D46.666.432 


S  1.979.990.434 
S452.S60.397 

S2.432.550.831 

S686. 792.716 

S  1.789.848 

S6S8.S82.S64 

S130.108.421 

S3.IS1.241.816 


S2.176.201.lll 
S482.226,76S 

S2.6S8.427.S79 

S620.947.777 

S2.423.369 

S623.371.146 

S  137.75 1.703 

S3.419.S60.72a 


$2,170,000,000         S3.044.0OO.0OO         S4. 147.575.000         S5.208.772.800         S6.334.406.359  $6,581,972,263 


S2.000.000.000 

S2j;oo.ooo.ooo 


S2.35S.0O0.0OO         $2,647,333,012         S2.904.619.182         $3,153,117,000  S3.SS4.S2S.000 

$2,252,000,000         S2.400.194.79S         $2,543,614,412         $2,590,901,883  SZ81 1.01 1.000 


ToteJ  —  Cesiooe 

Sportsbooka 

Horaeboolu 
Totel  —  Legal  Bookmeldng 
Cerd  Roome 

Bingo  [other  then  OD  Indieo 
reeervetionel 
Cberiteble  GeiDce 
Indian  Reeei  lalloae 

cum  n 

Clmam  IH 


TOTAL  LEGAL 


$4,200,000,000         K610.000.000         $6,047,527,810         $6,448,233,594         SS.744.018.8S3  $6,395,839,000 


$7,724,862 
$13,037,685 
$25,762,547 
$60,000,000 
$780,000,000 


$19,250,974 
$24,262,825 
$43,513,799 
$62,000,000 
$798,000,000 


$21,634,417 

$31,212,619 
$52,747,036 
$53,260,000 
SS17.862.797 


$21,947,393 
$39,056,828 
$61,004,221 
$54,847,500 
$910,035,688 


$35,598,000 
$45,007,000 
$80,605,000 
$55,944,450 
$941,648,581 


$29,821,000 
$55,383,000 
$86,204,000 
$260,000,000 
SS94.863.117 


$396,000,000  $464,000,000  $539,000,000  S682.000.000  SS05.S37.236  $674,846,891 


-  -  -  $87,500,000  SIOO.OOO.OOO  $110,000,000 

$10,413,762,547       $11,834,477,365      $13,616,129,072       $16,399,059,135       $16,913,702,325         $18,312.275990 


Source:     Anntial  estimates  prepared  by  ChnstJansenyCiimmings  Associates.  Inc.,  for  Gaming  &  Wagering 

Business  magazine's  July  15-Sept.  14  issues,  19S9-1993.    Most  recently  revised  figures  used. 
Notes:       *     "Other  Commertnal  Casinos'  includes  all  co.timerdal  land-based  casinos  that  are  not  in  Nevada  or 

New  Jersey  and  are  not  on  Intlian  reservations.   Examples  of  such  casinos  are  those  in  Deadwood.  SD, 

and  in  certain  towns  in  Colorado. 

**   *Non-Caaino  Gaming  Devices"  includes  gaming  devices  in  State-regtilated  non-casino  establishments 

such  as  bars,  restaurants,  stores,  etc. 

OTB  =  Off-Track  Betting 


19 


Table  4.   Estimated  National 


Legal  Gaming  WIN  (Gross  Revenues),  by  Type  of  Gamine 
1982-1992 


ia«8 

1988 

1990 

19SI 

1902 

Parimuluela 

Horse.  .  Truk 

$2,262,497,269 

$2,089,381,419 

$2,090,342,557 

J  1.976,45 1.169 

$1,939,309,121 

Honws  .  0TB 

1509.750,996 

$734,302,421 

$806,503,403 

$865,005,296 

$969,662,063 

Horeea  -  SubtotAi 

$2,762,248,265 

$2,823,683,840 

$2,896,845,960 

$2840.466.464 

$2908,871,184 

Greyhounds  -  Track 

$625,017,715 

$627,243,054 

$691,774,030 

$701,246,641 

$675,367,175 

Greyhounds  ■  OTB 

$3,231,734 

$5,427,066 

$6,087,339 

$7,416,330 

$12,711,226 

Greyhounds  -  SubtoUi 

$628,249,449 

$632,670,120 

$696,861,369 

$708,662,971 

$688,078,400 

Jsi-diU 

$124,187,617 

$107,766,036 

$113,131,625 

$100,343,331 

$89,264,492 

Tolsl  —  Psumutuol. 

$3,514,686,331 

$3,564,119,996 

$3,706,838,854 

$3,649,462,766 

$3,686,214,076 

LottoHes 

All  Olher  Gimta 

- 

- 

$10,192,418,000 

$10,105,539,000 

$11,214,733,000 

Video  LoltencM 

- 

- 

$96,462,000 

$121,841000 

$242230,000 

ToUl  —  UlUne. 
Casinos 

J8.423.628.720 

$9,599,360,000 

$10,288,880,000 

$10,227,381,000 

$11,466,963,000 

NV/NJ  Slol  Mjchinoi 

$4,006,823,000 

$4,360,125,000 

$4,890,301,000 

$6.242299.000 

$6,830,586,443 

NV/NJ  Table  Camea 

$3,054,030,000 

$3,103,516,000 

$3,412,892,000 

$3,200,968,000 

$3,120,137,399 

Crujse  Ships 

- 

$170,000,000 

$260,759,000 

$290,887,000 

$306,431,350 

Riverboata 

- 

- 

- 

$79,686,780 

$418,021,561 

Other  Commercial 

- 

$2,140,293 

$31,972,405 

$63,912,237 

$224,300,143 

Non-Caaino  Gaming 
Devices** 

$96,770,000 

$107,443,693 

$132,613,300 

$167,680,407 

$242172,466 

Tolal  —  Casinos 

$7. 156.623.000 

$7,733,224,986 

$8,728,537,706 

$9,036,432,424 

$10,140,649,362 

Legal  Bookjsaldng 

Sportsbooka 

$42,022,000 

$46,775,000 

$48,799,000 

$62300.000 

$60,601000 

Horsobooka 

$61,687,000 

$69,993,000 

$76,466,867 

$66,079,878 

$46,799,000 

Tolal  -  Ug.1  Bookmaking 

$103,709,000 

$106,768,000 

$125,254,867 

$107,379,878 

$97,401,000 

Card  Rooma 

$276,250,000 

$695,510,064 

$667,593,000 

$659,114,000 

$660,811,000 

Bingo  [other  than  on  Indian 
reservationat 

$1,056,103,272 

$947,600,236 

$1,019,194,000 

$1,064,613,000 

$1,090,944,000 

Charitable  Games 

$712,409,564 

(I.114.337.S78 

$1,194,044,000 

$1,230,120,000 

$1,298,949,000 

Indian  RaMmUona 

Class  a 

- 

- 

S3S«,20a,000 

«4 19.260.000 

$429,000,000 

CUaain 

- 

- 

(100,300,000 

$300,900,000 

$1,069,940,000 

Total  —  Indian 
Raaarvntions 

$121,000,000 

$300,000,000 

$488,600,000 

$720,160,000 

$1,498,940,000 

TOTAL  LEGAL 

$2I.3S3.40».877 

$23,969,821,159 

$26,208,842,416 

$26.6a3, 663,068 

$29,930.871,43» 

Source:     Annual  estimatea  prepared  by  Chriatiansen/C 

Buainesa  magazme's  July  15-Sept.  14  issues, 

Notes:       •     "Other  Commercial  Casinos'  ineluiiea  all  r 

lummings  Associates,  Inc.,  for 

Gamine  &  Waeerinr 

1989-1993.   Most  recently  revised  Ggtlres  used. 

■  —  --— ™o."»i  uuiu-wuKni  auunae  mat  are  not  in  nevada  or 

New  Jersey  and  are  not  on  Indian  reservations.   Eiamples  of  such  casinos  are  those  in  Deadwood.  SD 

and  m  certain  towns  in  Colorado. 

••   'Non-Casino  Gaming  Devices'  includes  gaming  devices  in  State-regulated  non-casino  establishments 

such  as  bars,  restaurants,  stores,  etc. 

OTB  =  Off-Track  Betting 


20 


Table  3.  Changes  in  National  Legal  Gaming  WIN  (Gross  Revenues),  by  Type  of  Gaming, 
1982-1992  and  1985-1992 


Overall  Percent     Annual  Average                     Overall  Average  Annual 

Change:     Percent  Change:    Percent  Change:  Percent  r-hange: 

1982  to  1992            1982  to  1992          1985  (or  later  1985  (or  later 

year)  to  1992  year)  to  1992 


HorK>  -  Tr>ct 
Hoi»»aTB 
Horacs  -SubtoUj 
Greyhounds  •  Track 
Greyhounda  •  OTB 
Greyhounds  -  Sublotsl 
Jsi  sisi 

Total  —  Psnmuluels 

Lotteries 

All  Othsr  Gsnas 
Video  Lotteries 

Tolsl  —  Lotteries 


Caair 


NV/NJ  Slot  Madiines 
NV/NJ  Table  Gaaus 
Cmise  Ships 
Riverhosts 


4M% 
142.39% 
29.2«* 
57.06% 
1.109.38% 
SO  02% 
20  30* 
32.03% 


191.53% 
4182% 


0.47% 
9.26% 
260% 
4.62% 
36  56% 
4.81% 
-2.24% 
2.82% 


11.29% 
3.56% 


-210% 
136.90% 
21.70% 
28.33% 
1.412.36% 
30.53% 
-3101% 
20.99% 

10.03% 
151.11% 
119.96% 

100,73% 
22.67% 
79.67% 
424.59% 
10.379,88% 


0,30% 
13.11% 

285% 

3.63% 
47.41% 

3.88% 
■5.16% 

276% 

4.90% 
58.47% 
1192% 

10.47% 

2.96% 

21.57% 

424  59% 

371.47% 


Non-Casino  Gaining 

Devices" 
Total  —  (dittos 
Legal  BoolUDsking 

Sportabooks 

Horsebooka 
Total  —  Legal  Bookraaking 
Card  Rooms 
Bingo  father  than  on  Indian 

Charitable  Games 
Indias  RsssrvsUons 

Class  n 

Class  m 
TotsJ  —  ladUa 

TOTAL  LEGAL 


555  05% 

159.45% 

278.07% 

1.221.62% 

39.86% 

228.02% 


20.68% 
10.00% 
14.22% 
29.45% 
3.41% 

1261% 


15187% 


130.56% 
19.82% 
59.66% 
1,104.82% 
19.88% 

12^.19% 

10.51% 
966,74% 
1.613,07% 


26,10% 


12.67% 
262% 
6.91% 

42.70% 
262% 

1216% 

5.12% 
226.61% 
50.06% 


CaltnjJated  by  CRS  from  annual  estimates  prepared  by  ChnstiansenyCummings  Associates,  Inc..  for 

Gaming  &  Wagering  Business  magazine's  July  15-Sept.  14  issues,  1989-1993.  Most  recently  revised 

figures  tjsed, 

*     -Other  Commercial  Casinos"  includes  all  commercial  land-based  casinos  that  are  not  ui  Nevada 

or  New  Jersey  and  are  not  on  Indian  reservations.  Examples  of  such  casinos  are  those  in  Deadwood, 

SD,  and  in  certain  towns  in  (Colorado. 

••       -Non-Casmo    (5ammg    Devices'    includes    gaming   devices    in    Sute-regulated    non-casino 

establishments  such  as  bars,  restaurants,  stores,  etc. 

OTB  =  Off-Track  Betting 


21 


Table  6.  E^ach  Gaining  Type's  Share  of  National  Legal  Gaming  WIN  (Gross  Revenues),  1982-1992 


1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

I99I 

1992 

Parimutuela 

Horses  -  Track 

17.76% 

15.69% 

14.31% 

12.86% 

1L71% 

1L88% 

10.54% 

8.72% 

7.98% 

7.45% 

6.48% 

Horses  -  0TB 

3.84% 

3.39% 

3.00% 

2.66% 

268% 

2.63% 

2.39% 

3.06% 

3.08% 

3.22% 

3.24% 

Horses  —  Subtotal 

21.61% 

19.09% 

17.31% 

15.52% 

14.38% 

14.52% 

12.93% 

11.79% 

11.05% 

10.66% 

9.72% 

Greyhounds  -  Track 

4.13% 

3.83% 

3.51% 

3.42% 

3.47% 

3.39% 

2.93% 

262% 

2.64% 

i66% 

226% 

Greyhounds  -  0TB 

0.01% 

0.01%. 

0.01% 

0.01% 

0.02% 

0.02% 

0.02% 

0.03% 

0.04% 

Greyhounds  — 

4.13% 

3.83% 

3.52% 

3.42% 

3.48% 

3.40% 

294% 

2.64% 

266% 

269% 

230% 

Subtotal 

Jai-alai 

1.08% 

0.94% 

0.90% 

0.84% 

0.77% 

0.75% 

0.58% 

0.45% 

0.43% 

0.38% 

0.30% 

Total  —  Parimutuels 

26.81% 

23.86% 

21.73% 

19.78% 

18.63% 

18.67% 

16.45% 

14.88% 

14.14% 

13.73% 

12.32% 

Total  —  Lotteries 

20.84% 

25.72% 

30.46% 

33.83% 

37.45% 

35.94% 

39.43% 

40.06% 

39.26% 

38.26% 

38.28% 

Casinos 

^fv/NJ  Slot 

19.21% 

19.92% 

19.44% 

18.86% 

18.64% 

19.58% 

18.76% 

18.16% 

18.66% 

19.61% 

19.48% 

Machines 

NV/NJ  Table  Games 

21.13% 

19.03% 

17.63% 

16.52% 

15.32% 

15.35% 

14.30% 

12.95% 

13.02% 

11.98% 

10.42% 

Cruise  Ships 

— 

— 

— 

— 

— 

— 

— 

0.71% 

0.99% 

L09% 

L02% 

Riverboats 

— 

— 

- 

- 

- 

- 

- 

— 

- 

0.30% 

1.40% 

Other  Conunerdal 

_ 

_ 

— 

— 

_ 

— 

_ 

0.01% 

0.12% 

0.24% 

0.75% 

Casinos' 

Non-Casino  Gaming 

— 

— 

_ 

— 

— 

_ 

0.45% 

0.45% 

0.51% 

0.59% 

0.81% 

Devices" 

Total  —  Casinos 

40.33% 

38.95% 

37.07% 

35.38% 

33.96% 

34.93% 

33.50% 

32.28% 

33.30% 

33.80% 

33.88% 

Legal  Bookmaking 

Sportsbooks 

0.07% 

0.16% 

0.16% 

0.14% 

0.21% 

0.16% 

0.20% 

0.19% 

0.19% 

0.20% 

0.17% 

Horsebooks 

0.17% 

0.21% 

0.23% 

0.25% 

0.27% 

0.30% 

0.29% 

0.25% 

0.29% 

0.21% 

0.16% 

Total  —  Legal 

0.25% 

0.37% 

0.39% 

0.40% 

0.48% 

0.47% 

0.49% 

0.44% 

0.48% 

0.40% 

0.33% 

Bookmaking 

Card  Rooms 

0.48% 

0.44% 

0.39% 

0.36% 

0.33% 

1.37% 

1.29% 

2.49% 

2.51% 

2.47% 

2.21% 

Bingo  (other  than  on 

7.49% 

6.74% 

6.01% 

5.91% 

5.57% 

4.89% 

4.94% 

3.95% 

3.89% 

3.99% 

3.64% 

Indian  reservations] 

Charitable  Games 

3.80% 

3.92% 

3.96% 

3.78% 

2.99% 

3.14% 

3.33% 

4.65% 

4.56% 

4.65% 

4.34% 

Total  —  Indian 

_ 

_ 

_ 

0.57% 

0.59% 

0.60% 

0.57% 

1.25% 

1.86% 

2.69% 

5.01% 

Reservations 

TOTAL  LEGAL 

100.0% 

100.0% 

100.0% 

100.0% 

100  0% 

100.0% 

100.0% 

100.0% 

100.0% 

100.0% 

100.0% 

Calculated  by  CRS  from  annual  estimates  prepared  by  Christiansen/CummingB  Associates,  Inc.,  for  Gaming  &  Wagering 

Business  magazine's  July  15-Sept.  14  issues,  1989-1993.    Most  recently  revised  figures  used. 

*     "Other  Commercial  Casinos"  includes  all  commercial  land-based  casinos  that  are  not  in  Nevada  or  New  Jersey  and 

are  not  on  Indian  reservations.  Examples  of  such  casinos  are  those  in  Deadwood,  SD,  and  in  certain  towns  in  Colorado. 

••    "Non-Casino  Gaming  Devices"  includes  gaming  devices  in  State-regulated  non-casino  establishments  such  as  bars, 

restaurants,  stores,  etc. 

0TB  =  Off-Track  Betting 


22 


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32 

Mr.  Richardson.  With  that,  I  would  Uke  to  recognize  the  rank- 
ing member  of  our  subcommittee. 

STATEMENT  OF  HON.  CRAIG  THOMAS 

Mr.  Thomas.  Thank  you,  Mr.  Chairman.  I  heard  you.  I  will  also 
insert  mine  in  the  record.  I  think  it  is  very  important  that  we  have 
this  hearing.  This  is  the  fifth  one. 

It  seems  to  me,  and  I  am  not  an  old  hand  at  this  issue,  but  it 
does  seem  to  me  there  are  a  number  of  issues  that,  as  we  move  for- 
ward, need  to  be  clarified.  One,  I  suppose,  is  the  notion  among  gov- 
ernors and  others  that  there  is  absolutely  no  control  over  what  the 
tribes  do,  and  obviously  that  is  not  true.  Under  the  arrsingements 
the  tribes  do  only  what  can  be  done  in  the  State. 

On  the  other  hand,  I  think  there  is  some  feeling  among  some  of 
the  tribes  that  they  shouldn't  have  any  restrictions  at  all,  and  I 
don't  think  that  is  a  realistic  notion. 

So,  somehow  we  need  to  get  those  things  somewhat  clarified. 

In  any  event,  I  am  delighted  to  have  this  hearing,  and  I  espe- 
cially want  to  welcome  our  witnesses,  our  counterparts  from  the 
Senate. 

Grentlemen,  it  is  nice  to  have  you  here,  and  I  look  forward  to  your 
testimony. 

Thank  you,  sir. 

[Prepared  statement  of  Mr.  Thomas  follows:] 


33 


Statement  of  the 
Honorable  Craig  Thomas  of  Wyoming 

ON 

Oversight  of  the  I.G.R.A 
October  5,  1993 

Thank  you  Mr.  Chairman. 


I  am  pleased  to  take  part  in  this,  the  fifth  in  a  series  of 
oversight  hearings  on  the  Indian  Gaming  Regulatory  Act. 
I  think  that  it  is  vitally  important  that  we  as  a  body  fully 
examine  all  facets  of  this  issue  before  moving  on  to 
considering  any  legislation. 

As  you  know,  I  am  fully  committed  to  the  goals  and 
objectives  of  the  Indian  Gaming  Regulatory  Act.  Gaming 
in  Indian  country  since  the  enactment  of  IGRA  has  resulted 
in  unparalleled  economic  growth,  both  for  the  tribes  and  for 


34 

their  surrounding  non-Indian  communities.  Once  poverty- 
stricken  tribes  have  picked  themselves  up  by  their  boot- 
straps and  are  now  providing  educational,  employment, 
economic,  and  social  benefits  to  their  members.  In 
addition,  gaming  has  produced  a  beneficial  ripple  effect  in 
many  local  economies. 

While  IGRA  has,  in  my  opinion,  worked  well  in  its  present 
form,  it  is  clear  that  some  recent  developments  require  that 
we  reexamine  the  Act  to  fine-tune  It.  While  there  are  some 
issues  that  we  need  to  address  ~  the  issue  of  good-faith 
compacting,  for  example  ~  there  are  others  which  have 
been  raised  as  canards  by  opponents  of  Indian  gaming 
and  which  I  believe  we  need  simply  to  refute  and  subse- 
quently discard. 


Among  these  is  the  allegation  that  Indian  gaming  is  being 
significantly  infiltrated  by  organized  crime.  Although 
opponents  of  Indian  gaming  have  consistently  made  this 
allegation,  their  contention  lacks  both  specifics  and  proof. 
I  have  seen  no  credible  evidence  to  back  up  their  asser- 
tion. In  fact,  the  Department  of  Justice  has  repeatedly 
stated  that  this  is  simply  not  the  case.  I  look  forward  to  the 
testimony  of  the  representatives  from  the  FBI,  DO  J,  and 
IRS  on  this  issue  today,  and  hope  that  it  will  lay  to  rest 
these  accusations  once  and  for  all. 

Another  fiction  put  forward  by  the  opponents  of  Indian 
gaming  Is  that  the  tribes  have  been  somehow  provided  an 
unfair  competitive  advantage  over  other  citizens.  However, 
our  tragic  treatment  of  Indian  people  over  the  years  has 
placed  them  at  a  severe  disadvantage  both  economically 


36 

and  socially:  31%  of  Indian  people  live  In  poverty;  Native 
Americans  are  three  times  as  likely  to  be  unemployed  as 
non-Indian  people;  tubercolosis  levels  are  480%  higher 
than  for  the  general  population,  alcoholism  388%  higher, 
diabetes  169%  higher,  and  suicides  300%  higher.  Given 
these  figures,  even  if  we  had  intended  IGRA  to  give  the 
tribes  such  an  economic  edge  I  could  not  characterize  it  as 
unfair. 

In  any  event,  I  would  note  that  triabi  gaming  enterprises 
are  subject  to  many  legal  limitations  which  non-Indian 
enterprises  are  not.  Only  Indian  gaming  is  subject  to 
federal  oversight  and  regulation.  Only  Indian  tribes  are 
required  to  negotiate  with  state  governments  before  they 
can  engage  in  any  form  of  casino-type  gaming.  Only 
Indian  tribes  are  required  to  spend  their  gaming  income 


37 

solely  for  tribal  governmental  purposes  and  not  for  private 
business  profit. 

In  closing,  Mr.  Chairman,  I  would  like  to  welcome  our 
witnesses  today  --  especially  our  counterparts  from  the 
other  body  Senators  Inouye  and  McCain.  I  look  fonA/ard  to 
their  testimony.  In  addition,  at  this  point  I  have  several 
documents  that  I  would  like  to  submit  for  inclusion  in  the 
record. 

Thank  you,  Mr.  Chairman. 


38 

Mr.  Richardson.  The  chair  recognizes  the  gentleman  from  Ha- 
waii. 

STATEMENT  OF  HON.  NEIL  ABERCROMBIE 

Mr.  ABERCROMBIE.  Thank  you,  Mr.  Chairman. 

Mr.  Chairman,  my  remarks  will  consist  only  of  welcoming  Sen- 
ator Inouye  here,  not  only  as  a  colleague  but  as  a  mentor  of  some, 
more  than  three  decades  now.  Senator,  since  I  first  shook  your 
hand  on  the  comer  of  Kapewani  Boulevard.  We  have  seen  a  lot  of 
changes  since  then. 

But  one  of  the  changes  that  are  most  important,  Mr.  Chairman, 
for  purposes  of  this  hearing  is  that  Senator  Inouye  has  led  the  way 
in  this  Nation  in  contemporary  times  to  see  to  it  that  Native  Amer- 
ican affairs  receive  the  kind  of  legislative  attention  and  redress 
that  was  necessary. 

I  don't  believe  that  it  is  possible  to  cite  anyone  else  in  the  Nation 
in  our  legislative  history  that  has  shown  more  concern  and  taken 
more  practical  advantage  of  the  opportunity  to  lead  than  Senator 
Inouye  has. 

So  I,  as  one  of  those  who  has  not  only  followed  his  career  but 
been  the  beneficiary  of  his  legislative  expertise,  am  very,  very 
happy  to  be  here  serving  on  this  subcommittee  as  a  counterpart  to 
the  leadership  that  he  has  provided  in  the  United  States  Senate. 

Mr.  Richardson.  The  chair  recognizes  the  gentleman  from  Cali- 
fornia. 

STATEMENT  OF  HON.  KEN  CALVERT 

Mr.  Calvert.  Thank  you,  Mr.  Chairman.  I  have  a  brief  state- 
ment. 

Coming  from  a  State  which  has  the  largest  number  of  federally- 
recognized  Indian  tribes  in  the  Nation,  I  am  particularly  concerned 
about  the  potential  for  organized  criminal  activity  and  corruption 
when  gaming  operations  are  not  properly  regulated.  Let  me  hasten 
to  add  that  I  support  the  legal  right  of  Indian  tribes  to  offer  various 
games  of  chance  on  the  reservations  as  long  as  those  games  are 
consistent  with  State  law  and  as  long  as  they  are  properly  regu- 
lated. 

There  are  several  Indian  tribes  in  California  that  currently  have 
extremely  well-run  gaming  operations  to  promote  economic  devel- 
opment, self-sufficiency,  and  strong  tribal  government.  I  support 
those  operations.  My  interest  is  simply  to  make  certain  that  all 
gaming  operations  on  Indian  lands  are  free  of  corrupting  influence, 
to  ensure  that  the  tribes,  not  outsiders,  are  the  primary  bene- 
ficiaries, and  that  the  State  of  California  is  not  saddled  with  in- 
creased costs  of  law  enforcement  and  regulation. 

When  it  comes  to  Indian  gaming,  I  want  the  Indians  and  people 
of  California  to  be  winners  and  not  forces  of  organized  crime. 

Thank  you,  Mr.  Chairman. 

Mr.  Richardson.  I  recognize  the  gentleman  from  South  Dakota. 

STATEMENT  OF  HON.  TIM  JOHNSON 

Mr.  Johnson.  Thank  you,  Mr.  Chairman.  I  commend  you  for 
holding  this  very  timely  and  critically  important  hearing.  I  wel- 
come the  members  of  the  panel,  who  I  know  will  ail  make  very 


39 

positive  contributions  to  the  dialogue  on  this  ongoing  debate  that 
we  have  over  the  role  of  Indian  gaming  and  its  relationship  with 
the  various  States. 

In  the  State  of  South  Dakota,  we  have  nine  Indian  reservations. 
We  have  ongoing,  very  active  gaming  operations.  The  negotiation 
with  the  State  has  sometimes  been  a  bit  rocky  but,  on  the  whole, 
has  worked  itself  out  fairly  well. 

I  think  it  is  regrettable  in  some  respects  that  gaming  seems  to 
be  such  a  major  engine  for  economic  development  and  job  oppor- 
tunity on  Indian  reservations,  but  after  over  100  years  of  virtually 
utter  failure  in  my  State  of  South  Dakota  developing  other  kinds 
of  economic  opportunities,  I  would  have  to  say  that  at  this  point 
we  have  over  1,000  Native  Americans  employed  in  the  gaming  in- 
dustry, generating  a  large  amount  of  revenue  for  tribes,  for  the 
most  part  used  for  very  worthy  purposes.  These  Native  Americans 
who  are  employed  in  many  cases  have  never  held  employment  be- 
fore, and  I  think  that  the  combination  of  new  economic  opportuni- 
ties plus  enhanced  education  opportunities  with  the  development  of 
our  tribal  colleges  has  been  two  of  the  most  positive  things  that  we 
have  seen  in  a  long,  long  time  in  my  State  to  break  the  cycle  of 
poverty  and  to  break  the  ongoing  dependence  of  Native  Americans 
to  the  Federal  Government,  to  create  a  greater  sense  of  self-suffi- 
ciency and  to  develop  a  greater  degree  of  viability,  economic  viabil- 
ity, on  the  reservations. 

Nonetheless,  it  does  require  a  delicate  balance  between  the 
States  and  the  tribes,  it  does  require  a  very  aggressive  monitoring 
to  make  sure  that  organized  crime  does  not  become  involved  here, 
that  the  money — that  the  revenues  are  audited  properly,  that  the 
management  is  kept  on  a  high  level.  So  I  think  this  hearing  will 
be  a  valuable  contribution  in  our  effort  to  oversee  and  possibly  to 
pass  legislation  relative  to  Indian  gaming. 

So  I  thank  you,  Mr.  Chairman,  for  holding  this  hearing  on  an 
issue  that  is  critically  important  not  just  to  us  in  the  West  but  real- 
ly all  across  the  country. 

Mr.  Richardson.  I  thank  the  gentleman. 

I  would  like  to  welcome  our  four  distinguished  Members  of  the 
House  and  Senate  who  will  be  making  their  testimony. 

As  you  all  know,  it  is  the  committee  practice  that  the  statement 
is  fully  included  in  the  record. 

I  would  first  like  to  welcome  the  distinguished  chairman  of  the 
Senate  Committee  on  Native  American  Affairs  who  has  been  ag- 
gressively pursuing  a  solution  to  this  issue.  He  is  a  champion  of 
many  Native  American  causes.  It  is  an  honor  for  us  to  have  him 
appear  with  us  along  with  his  vice  chairman.  TTie  chair  recognizes 
the  distinguished  Senator  from  Hawaii. 

STATEMENT  OF  HON.  DANIEL  K.  INOUYE,  A  U.S.  SENATOR 
FROM  THE  STATE  OF  HAWAII,  AND  CHAIRMAN,  SENATE 
COMMITTEE  ON  INDIAN  AFFAIRS 

Senator  Inouye.  Thank  you  very  much,  Mr.  Chairman. 

Mr.  Chairman  and  members  of  the  committee.  Senator  McCain 
and  I  are  most  grateful  to  you  for  your  invitation  to  share  our 
thoughts  with  you  on  a  matter  pending  before  your  committee. 


40 

While  Senator  McCain  will  present  to  you  an  analysis  of  the  his- 
tory and  conditions  that  led  to  the  now  famous  Supreme  Court  case 
in  Cabazon,  I  will  try  to  briefly  share  with  you  my  thoughts  on  why 
I  feel  the  Government  of  the  United  States,  of  which  we  are  a  part, 
plays  an  important  role  in  the  furtherance  of  the  general  welfare 
of  native  peoples. 

Although  it  seems  trite  and  redundant  to  say  so,  it  must  be  re- 
peated often  enough  so  that  all  Americans  will  always  keep  in 
mind  that  Indians  were  here  before  we  came  along — ^that  this  was 
their  world — ^that  in  this  world  they  established  and  maintained 
sovereign  governments,  governments  that  flourished,  governments 
that  were  led  by  people  who  were  highly  sophisticated  and  most 
talented. 

We  should  remind  ourselves  that  in  recognition  of  this  reality, 
when  the  Constitution  of  the  United  States  was  drafted,  our 
Founding  Fathers  specifically  included  the  native  peoples  of  this 
land  and  set  forth  the  foundation  of  what  we  now  call  trust  rela- 
tionship, and  in  subsequent  laws  and  Supreme  Court  rulings  this 
trust  relationship  has  been  consistently  upheld,  even  during  the 
dark  days  of  the  so-called  Indian  Wars. 

In  recognizing  this  special  relationship,  our  Grovemment,  more 
importantly,  recognized  the  sovereign  nature  of  the  governments  of 
native  people.  This  fact  must  be  emphasized  again  and  again.  In- 
dian nations  are  sovereign  nations. 

To  that  end,  our  predecessors  in  the  Congress  during  the  last 
century  and  the  century  prior  to  that  entered  into  negotiations 
with  these  sovereign  tribes  culminated  by  the  signing  of  solemn 
treaties. 

It  has  been  said  that  the  Government  of  the  United  States  sol- 
emnly entered  into  800  treaties  with  the  various  tribes  and  nations 
of  Indian  country.  Like  all  treaties,  we  made  promises  and  Indians 
made  promises.  In  each  case,  we  expected  and  we  demanded  that 
Indians  live  up  to  their  promises.  But  I  am  sad  to  say  that,  of  the 
800  treaties,  430  were  ignored  by  my  predecessors  in  the  United 
States  Senate.  The  Members  of  the  United  States  Senate  simply  re- 
fused to  act  upon  them.  Of  the  370  that  were  ratified,  we,  the  Unit- 
ed States,  proceeded  to  violate  provisions  in  every  single  one  of 
them.  Now  we  have  before  us  the  matter  of  Indian  gaming. 

As  the  Supreme  Court  in  the  Cabazon  case  and  the  United 
States  Constitution  and  subsequently  enacted  laws  have  clearly 
recognized,  Indian  nations  are  sovereign.  It  is  in  this  context  and 
in  our  desire  to  uphold  the  Constitution  and  honor  the  intent  of  our 
Founding  Fathers  that  we  enacted  the  Indian  Gaming  Regulatory 
Act  of  1988. 

However,  this  law  has  a  fundamental  but  often  unrecognized  al- 
teration to  our  national  policy  of  trust  relationship.  In  a  real  sense, 
the  relationship,  when  it  concerns  the  conduct  of  gaming  activities 
on  Indian  lands,  should  have  been  between  the  Federal  Govern- 
ment and  Indian  nations. 

However,  because  of  the  complex  variety  in  the  laws  of  the  50 
States,  we  soon  found  that  it  was  almost  impossible  to  develop  a 
Federal  law  or  standard  that  would  apply  in  a  consistent  and  uni- 
form manner  in  all  50  States.  Some  States  have  lotteries,  some 
have  the  full  array  of  casino  operations,  and  some,  like  my  home 


41 

State,  have  no  gaming  at  all.  So  with  the  full  understanding  of  In- 
dian nations,  we  enacted  a  law  that  called  for  compacts  to  be  en- 
tered into  by  two  sovereign  entities,  a  State  and  an  Indian  nation. 

Since  July  of  this  year,  under  the  sponsorship  of  the  Senate  Com- 
mittee on  Indian  Affairs,  representatives  of  the  National  Governors 
Association,  representatives  of  the  National  Association  of  Attor- 
neys General,  representatives  of  the  Federal  Government,  and  rep- 
resentatives of  tribal  governments  have  come  together  to  clarify 
questions  that  have  arisen  as  the  result  of  the  implementation  of 
this  law. 

Many  meetings  have  been  held  in  this  city,  in  the  State  of  Wash- 
ington, in  New  Mexico,  in  Arizona,  and  in  Colorado.  Countless  hun- 
dreds of  hours  have  been  expended  on  discussions  and  negotiations, 
and,  Mr.  Chairman,  I  believe  that  we  are  close  to  resolution. 

For  example,  all  parties  recognize  that  gaming  has  become  an 
enterprise  upon  which  many  State  governments  across  this  land  in- 
creasingly rely  so  that  these  governments  may  provide  a  full  range 
of  governmental  services  to  their  citizens. 

What  was  once  strictly  a  private  commercial  enterprise  is  neither 
solely  private  nor  commercial  any  longer.  Whether  we  may  like  it 
or  not,  in  this  Nation,  govemmentally-sponsored  and  govem- 
mentally-conducted  gaming  is  growing  geometrically  each  year,  and 
so  tribal  governments  have  begun  to  join  their  sister  State  govern- 
ments in  this  enterprise. 

In  this  process  of  discussion  and  negotiation,  all  parties  appear 
to  desire  greater  certainty  in  the  determination  of  what  games  are 
permitted  to  be  played  under  the  laws  of  each  State.  All  parties 
recognize  that  for  those  States  that  do  not  elect  to  enter  into  tribal- 
State  compacts,  there  must  be  an  alternative  process  for  securing 
authority  to  conduct  Class  III  gaming  on  Indian  lands.  All  parties 
strongly  endorse  the  most  stringent  regulation  of  gaming  and  the 
need  for  comprehensive  and  cooperative  law  enforcement.  Through 
this  process  of  discussion  and  negotiation,  we  have  found  that  there 
are  more  interests  in  common  and  fewer  over  which  there  is  a  dif- 
ference in  perspective. 

On  October  19,  we  will  have  a  meeting  of  all  the  principals,  and 
I  am  hopeful  that  at  this  meeting  we  may  come  forth  with  some 
final  resolution  of  the  matter  before  us.  We  are  working  towards 
that  end,  and,  if  I  may,  through  these  means,  I  would  like  to  thank 
all  of  the  parties  for  their  many  hours  of  patient  effort  and  dedica- 
tion to  this  process. 

Mr.  Chairman,  I  am  aware  that  most  Americans  are  surprised  to 
learn  that  Indians  are  sovereign.  While  Indians  live  on  lands  that 
have  been  set  aside  for  them  and,  for  the  most  part,  held  in  trust 
by  our  Government,  many  of  these  sovereign  Indian  nations  collect 
taxes,  they  enact  ordinances  and  laws,  they  have  the  power  and 
authority  to  arrest,  to  levy  fines  and  impose  punishment,  they  have 
the  power  to  regulate  the  environment,  to  administer  education 
and  health  care  programs,  they  have  the  power  to  operate  judicial 
systems  and  to  enter  into  the  agreements  and  compacts  with  other 
governments. 

Mr.  Chairman,  in  recent  months  I  have  spoken  before  various 
groups  and  councils  advocating  the  right  of  Indian  nations  to  estab- 
lish and  conduct  gaming  operations  in  those  States  that  do  not 


42 

criminally  prohibit  such  activities.  In  a  sense,  I  find  myself  a  bit 
uncomfortable  in  this  role  because  throughout  my  adult  life  I  have 
opposed  gaming  as  a  means  of  raising  revenue  to  support  govern- 
ment activities.  As  you  may  know,  the  State  of  Hawaii  prohibits  all 
forms  of  gaming,  including  bingo. 

Mr.  Chairman,  however,  in  the  case  of  Indian  nations,  I  support 
the  tribes  in  their  gaming  activities  because  I  believe  that  we  as 
a  nation  have  failed  in  our  job  of  upholding  our  responsibilities  and 
obligations. 

In  the  800  treaties  that  we  have  either  ignored  or  violated,  we 
promised  the  Indians  that  in  exchange  for  the  hundreds  of  millions 
of  acres  that  they  ceded  to  us  we  would  protect  them,  assure  their 
security,  and  provide  for  their  general  welfare,  but  history  shows 
that  we  have  failed  and  failed  miserably. 

Instead,  we  participated  in  massacres,  we  did  not  come  to  their 
aid  in  times  of  pestilence  and  starvation,  and  so  today  Indian  na- 
tions that  once  flourished  and  numbered  in  excess  of  10  million 
people  have  little  more  than  2  million  in  their  population.  In  com- 
parison, every  ethnic  group  in  the  United  States  has  increased  in 
size  over  the  past  200  years. 

But  in  this  great  country  of  ours,  the  Indian  unemployment  is 
the  highest,  their  health  statistics  are  the  worst,  their  economic 
conditions  know  no  equal,  and  yet,  Mr.  Chairman,  in  all  of  the 
wars  of  this  century  in  which  we  have  participated,  Indian  people 
have,  in  the  spirit  of  brotherhood,  volunteered  to  serve  in  every  one 
of  them.  In  fact,  on  a  per  capita  basis,  there  are  more  veterans  in 
Indian  country  than  in  the  rest  of  this  Nation.  On  a  per  capita 
basis,  more  IndiEins  have  given  their  lives  and  their  limbs  in  the 
service  of  our  country  than  any  other  ethnic  group. 

Mr.  Chairman,  clearly  they  have  paid  their  dues.  I  believe  the 
time  has  come  for  this  Nation  to  reciprocate,  and  I  thank  you  once 
again  for  this  opportunity,  and  I  thank  my  colleague  from  Hawaii 
for  his  very  generous  remarks.  Thank  you  very  much,  sir. 

[Prepared  statement  of  Mr.  Inouye  follows:] 


43 


STATEMENT  OF  SENATOR  DANIEL  K.  INOUYE 

CHAIRMAN,  COMMITTEE  ON  INDIAN  AFFAIRS 

UNITED  STATES  SENATE 

BEFORE  THE  OCTOBER  5,  1993  HEARING 

OF  THE 

SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

COMMITTEE  ON  NATURAL  RESOURCES 

U.S.  HOUSE  OF  REPRESENTATIVES 

MR.  CHAIRMAN,  AND  MEMBERS  OF  THE  SUBCOMMITTEE  ON  NATIVE  AMERICAN 
AFFAIRS,  SENATOR  McCAIN  AND  I  ARE  MOST  GRATEFUL  TO  YOU  FOR  YOUR 
INVITATION  TO  SHARE  OUR  THOUGHTS  WITH  YOU  ON  THE  MATTER  THAT  IS  BEFORE 
YOUR  COMMITTEE  TODAY  --    INDIAN  GAMING. 

WHILE  SENATOR  McCAIN  WILL  PRESENT  TO  YOU  AN  ANALYSIS  OF  THE  HISTORY 
AND  CONDITIONS  THAT  LED  TO  THE  NOW-FAMOUS  SUPREME  COURT  RULING  IN  THE 
CABAZON  CASE,    1  WILL  TRY  TO  BRIEFLY  SHARE  WFTH  YOU  MY  THOUGHTS  ON  WHY  I 
FEEL  THE  GOVERNMENT  OF  THE  UNITED  STATES,  OF  WHICH  WE  ARE  A  PART.  PLAYS  AN 
IMPORTANT  ROLE  IN  THE  FURTHERANCE  OF  THE  GENERAL  WELFARE  OF  INDL\N 
PEOPLE. 

ALTHOUGH  IT  SEEMS  TRITE  AND  REDUNDANT  TO  SAY  SO,  IT  MUST  BE  REPEATED 
OFTEN  ENOUGH  SO  THAT  ALL  AMERICANS  WILL  ALWAYS  KEEP  IN  MIND  THAT  INDL\NS 
WERE  HERE  BEFORE  THE  EUROPEANS  --  THAT  THIS  WAS  THEIR  WORLD. 

THAT  IN  THIS  WORLD  THEY  ESTABLISHED  AND  MAINTAINED  SOVEREIGN 
GOVERNMENTS  --  GOVERNMENTS  THAT  FLOURISHED  --  GOVERNMENTS  THAT  WERE 


44 

LED  BY  PEOPLE  WHO  WERE  HIGHLY  SOPHISTICATED  AND  TALENTED. 

WE  SHOULD  REMIND  OURSELVES  THAT  IN  RECOGNITION  OF  THIS  REALITY. 
WHEN  THE  CONSTITUTION  OF  THE  UNITED  STATES  WAS  DRAFTED,  OUR  FOUNDING 
FATHERS  SPECIFICALLY  INCLUDED  THE  NATIVE  PEOPLES  OF  THIS  LAND  AND  SET 
FORTH  THE  FOUNDATION  OF  WHAT  WE  NOW  CALL  THE  TRUST  RELATIONSHIP. 

AND  IN  SUBSEQUENT  LAWS  AND  SUPREME  COURT  RULINGS.  THIS  TRUST 
RELATIONSHIP  HAS  BEEN  CONSISTENTLY  UPHELD,  EVEN  DURING  THE  DARK  DAYS  OF 
THE  SO-CALLED  "INDL^iN  WARS". 

IN  RECOGNIZING  THIS  SPECL«iL  RELATIONSHIP.  OUR  GOVERNMENT  --  MORE 
IMPORTANTLY  --  RECOGNIZED  THE  SOVEREIGN  NATURE  OF  THE  GOVERNMENTS  OF 
NATIVE  PEOPLES.   THIS  FACT  MUST  BE  EMPHASIZED  AGAIN  AND  AGAIN.    INDIAN 
NATIONS  ARE  SOVEREIGN. 

TO  THAT  END,  OUR  PREDECESSORS  IN  THE  CONGRESS,  DURING  THE  LAST 
CENTURY  AND  THE  CENTURY  PRIOR  TO  THAT,  ENTERED  INTO  NEGOTL\TIONS  WITH 
THESE  SOVEREIGN  TRIBES  --  CULMINATED  BY  THE  SIGNING  OF  SOLEMN  TREATIES. 

IT  HAS  BEEN  SAID  THAT  THE  GOVERNMENT  OF  THE  UNITED  STATES  SOLEMNLY 
ENTERED  INTO  800  TREATIES  WITH  THE  VARIOUS  TRIBES  AND  NATIONS  OF  INDIAN 
COUNTRY.    LIKE  ALL  TREATIES,  WE  MADE  PROMISES,  AND  THE  INDL^iNS  MADE 
PROMISES. 

IN  EACH  CASE,  WE  EXPECTED  THE  INDIANS  TO  LIVE  UP  TO  THEIR  PROMISES.  BUT 


45 


I  AM  SAD  TO  REPORT,  THAT  OF  THE  800  TREATIES,  430  WERE  IGNORED  BY  MY 
PREDECESSORS  IN  THE  UNITED  STATES  SENATE   -  THE  MEMBERS  OF  THE  SENATE 
SIMPLY  REFUSED  TO  ACT  UPON  THEM. 

OF  THE  370  THAT  WERE  RATIFIED.  WE,  THE  UNITED  STATES,  PROCEEDED  TO 
VIOLATE  PROVISIONS  IN  EVERY  SINGLE  ONE  OF  THEM. 

NOW  WE  HAVE  THE  MATTER  OF  INDIAN  GAMING  BEFORE  US.   AS  THE  SUPREME 
COURT  IN  THE  CABAZON  CASE  AND  THE  UNITED  STATES  CONSTITUTION  AND 
SUBSEQUENTLY-ENACTED  LAWS  HAVE  CLEARLY  RECOGNIZED,  INDIAN  NATIONS  ARE 
SOVEREIGN. 

IT  IS  IN  THIS  CONTEXT  AND  IN  OUR  DESIRE  TO  UPHOLD  THE  CONSTITUTION  AND 
HONOR  THE  INTENT  OF  OUR  FOUNDING  FATHERS  THAT  WE  ENACTED  THE  INDIAN 
GAMING  REGULATORY  ACT  OF  1988. 

HOWEVER,  THIS  LAW,  HAS  A  FUNDAMENTAL  BUT  OFTEN  UNRECOGNIZED 
ALTERATION  TO  OUR  NATIONAL  POLICY  OF  TRUST  RELATIONSHIP. 

IN  A  REAL  SENSE,  THE  RELATIONSHIP  --  WHEN  IT  CONCERNS  THE  CONDUCT  OF 
GAMING  ACTIVITIES  ON  INDIAN  LANDS  --  SHOULD  HAVE  BEEN  BETWEEN  THE  FEDERAL 
GOVERNMENT  AND  INDIAN  NATIONS. 

HOWEVER,  BECAUSE  OF  THE  COMPLEX  VARIETY  IN  THE  LAWS  OF  THE  FIFTY 
STATES.  WE  SOON  FOUND  THAT  IT  WAS  ALMOST  IMPOSSIBLE  TO  DEVELOP  A  FEDERAL 
LAW  OR  STANDARD  THAT  WOULD  APPLY  IN  A  CONSISTENT  AND  UNIFORM  MANNER  IN 


46 


ALL  HFTY  STATES. 

SOME  STAT1ES  HAVE  LOTTERIES,  SOME  HAVE  THE  FULL  ARRAY  OF  CASINO 
OPERATIONS.  AND  SOME,  LIKE  MY  HOME  STATE.  HAVE  NO  GAMING  AT  ALL. 

AND  SO,  WITH  THE  FULL  UNDERSTANDING  OF  THE  INDIAN  NATIONS,  WE 
ENACTED  A  LAW  THAT  CALLED  FOR  COMPACTS  TO  BE  ENTERED  INTO  BY  THE 
SOVEREIGN  ENTITIES  --  STATES  AND  INDL^iN  NATIONS. 

SINCE  JULY  OF  THIS  YEAR,  UNDER  THE  SPONSORSHIP  OF  THE  COMMITTEE  ON 
INDIAN  AFFAIRS,  REPRESENTATIVES  OF  THE  NATIONAL  GOVERNORS  ASSOCIATION, 
REPRESENTATIVES  OF  THE  NATIONAL  ASS0CL\T10N  OF  ATTORNEYS  GENERAL, 
REPRESENTATIVES  OF  THE  FEDERAL  GOVERNMENT  AND  REPRESENTATIVES  OF  TRIBAL 
GOVERNMENTS  HAVE  COME  TOGETHER  TO  CLARimf  QUESTIONS  THAT  HAVE  ARISEN 
AS  A  RESULT  OF  THE  IMPLEMENTATION  OF  THIS  LAW. 

MEETINGS  HAVE  BEEN  HELD  IN  WASHINGTON,  DC,  AND  IN  WASHINGTON  STATE. 
AND  IN  NEW  MEXICO. 

COUNTLESS  HUNDREDS  OF  HOURS  HAVE  BEEN  EXPENDED  ON  DISCUSSIONS  AND 
NEGOTLaiTIONS,  AND  IT  WOULD  NOW  APPEAR  THAT  WE  ARE  CLOSE  TO  RESOLUTION. 

FOR  EXAMPLE,  ALL  PARTIES  RECOGNIZE  THAT  GAMING  HAS  BECOME  AN 
ENTERPRISE  UPON  WHICH  MANY  STATE  GOVERNMENTS  ACROSS  THIS  LAND 
INCREASINGLY  RELY,  SO  THAT  THESE  GOVERNMENTS  MAY  PROVIDE  A  FULL  RANGE  OF 
GOVERNMENTAL  SERVICES  TO  THEIR  CITIZENS. 


47 


WHAT  WAS  ONCE  STRICTLY  A  PRIVATE  COMMERCIAL  ENTERPRISE  IS  NEITHER 
SOLELY  PRIVATE  NOR  COMMERCIAL  ANY  LONGER. 

AND  WHETHER  WE  MAY  LIKE  IT  OR  NOT,  IN  THIS  NATION,  GOVERNMENTALLY- 
SPONSORED  AND  GOVERNMENTALLY-CONDUCTED  GAMING  IS  GROWING 
GEOMETRICALLY  EACH  YEAR. 

TRIBAL  GOVERNMENTS  HAVE  BEGUN  TO  JOIN  THEIR  SISTER  STATE 
GOVERNMENTS  IN  THIS  ENTERPRISE. 

IN  THIS  PROCESS  OF  DISCUSSION  AND  NEGOTL\TION,  ALL  PARTIES  APPEAR  TO 
DESIRE  GREATER  CERTAINTY  IN  THE  DETERMINATION  OF  WHAT  GAMES  ARE 
PERMITTED  TO  BE  PLAYED  UNDER  THE  LAWS  OF  EACH  STATE. 

ALL  PARTIES  RECOGNIZE  THAT  FOR  THOSE  STATES  THAT  DO  NOT  ELECT  TO 
ENTER  INTO  TRIBAL-STATE  COMPACTS,  THERE  MUST  BE  AN  ALTERNATIVE  PROCESS 
FOR  SECURING  AUTHORITY  TO  CONDUCT  CLASS  III  GAMING  ON  INDL^iN  LANDS. 

ALL  PARTIES  STRONGLY  ENDORSE  THE  MOST  STRINGENT  REGULATION  OF 
GAMING,  AND  THE  NEED  FOR  COMPREHENSIVE  AND  COOPERATIVE  LAW 
ENFORCEMENT. 

THROUGH  THIS  PROCESS  OF  DISCUSSION  AND  NEGOTL\TION,  WE  HAVE  FOUND 
THAT  THERE  ARE  MORE  INTERESTS  IN  COMMON.  AND  FEWER  OVER  WHICH  THERE  IS  A 
DIFFERENCE  IN  PERSPECTIVE. 


48 


ON  OCTOBER  THE  19TH,  WE  WILL  HAVE  A  MEETING  OF  ALL  OF  THE  PRINCIPALS 
AND  I  AM  HOPEFUL  THAT  AT  THIS  MEETING,  WE  MAY  COME  FORTH  WITH  SOME  HNAL 
RESOLUTION  OF  THE  MATTER  BEFORE  US  AND  WE  ARE  WORKING  TOWARDS  THAT 
END. 

AND  IF  I  MAY,  THROUGH  THESE  MEANS,  I  WOULD  LIKE  TO  THANK  AND 
CONGRATULATE  ALL  OF  THE  PARTIES  FOR  THEIR  MANY  HOURS  OF  PATIENT  EFFORT 
AND  DEDICATION  TO  THE  PROCESS. 

I  AM  AWARE  THAT  MOST  AMERICANS  ARE  SURPRISED  TO  LEARN  OF  INDIAN 
SOVEREIGNTY.   WHILE  INDIANS  LIVE  ON  LANDS  THAT  HAVE  BEEN  SET  ASIDE  FOR 
THEM  AND  FOR  THE  MOST  PART  HELD  IN  TRUST  BY  OUR  GOVERNMENT.  MANY  OF 
THESE  SOVEREIGN  INDIAN  NATIONS  COLLECT  TAXES,  ENACT  ORDINANCES,  HAVE  THE 
POWER  AND  AUTHORITY  TO  ARREST.  TO  LEVY  FINES  AND  IMPOSE  PUNISHMENT,  TO 
REGULATE  ENVIRONMENTAL  QUALITY,  TO  ADMINISTER  EDUCATION  AND  HEALTH 
CARE  PROGRAMS,  TO  OPERATE  JUDICIAL  SYSTEMS,  AND  TO  ENTER  INTO  AGREEMENTS 
AND  COMPACTS  WITH  OTHER  GOVERNMENTS. 

MR.  CHAIRMAN.  IN  RECENT  MONTHS,  I  HAVE  SPOKEN  BEFORE  VARIOUS  GROUPS 
AND  COUNCILS  ADVOCATING  THE  RIGHT  OF  INDIAN  NATIONS  TO  ESTABLISH  AND 
CONDUCT  GAMING  OPERATIONS  IN  THOSE  STATES  THAT  DO  NOT  CRIMINALLY 
PROHIBIT  SUCH  ACnVITIES. 

IN  A  SENSE,  1  FIND  MYSELF  A  BIT  UNCOMFORTABLE  IN  THIS  ROLE  BECAUSE 
THROUGHOUT  MY  ADULT  LIFE,  I  HAVE  OPPOSED  GAMING  AS  A  MEANS  OF  RAISING 
REVENUE  TO  SUPPORT  GOVERNMENTAL  ACTIVITIES. 


49 


AS  YOU  MAY  KNOW,  THE  STATE  OF  HAWAII  PROHIBITS  ALL  FORMS  OF  GAMING, 
INCLUDING  BINGO. 

HOWEVER,  IN  THE  CASE  OF  THE  INDIAN  NATIONS,  I  SUPPORT  THE  TRIBES  IN  ALL 
OF  THEIR  ACnVITIES,  BECAUSE  I  BELIEVE  THAT  WE  AS  A  NATION  HAVE  FAILED  IN  OUR 
JOB  OF  UPHOLDING  OUR  RESPONSIBILITIES. 

IN  THE  800  TREATIES  THAT  WE  HAVE  EITHER  IGNORED  OR  VIOLATED,  WE 
PROMISED  THE  INDL\NS  THAT  IN  EXCHANGE  FOR  THE  HUNDREDS  OF  MILLIONS  OF 
ACRES  THAT  THEY  CEDED  TO  US,  WE  WOULD  PROTECT  THEM,  ASSURE  THEIR  SECURITY 
AND  PROVIDE  FOR  THEIR  GENERAL  WELFARE. 

BUT  HISTORY  SHOWS  THAT  WE  HAVE  FAILED  MISERABLY.   INSTEAD,  WE 
PARTICIPATED  IN  MASSACRES.   WE  DID  NOT  COME  TO  THEIR  AID  IN  TIMES  OF 
PESTILENCE  AND  STARVATION.   AND  SO  TODAY,  INDIAN  NATIONS  THAT  ONCE 
NUMBERED  IN  EXCESS  OF  10  MILLION  PEOPLE  HAVE  LITTLE  MORE  THAN  2  MILLION  IN 
THEIR  POPULATION. 

IN  COMPARISON,  EVERY  ETHNIC  GROUP  IN  THE  UNITED  STATES  HAS  INCREASED 
IN  SIZE  OVER  THE  PAST  200  YEARS.  BUT  IN  THIS  GREAT  COUNTRY  OF  OURS,  THE 
INDIAN  UNEMPLOYMENT  IS  THE  HIGHEST,  THEIR  HEALTH  STATISTICS  ARE  THE  WORST, 
THEIR  ECONOMIC  CONDITIONS  KNOW  NO  EQUAL. 

AND  YET,  MR.  CHAIRMAN,  IN  ALL  OF  THE  WARS  OF  THIS  CENTURY,  THE  INDIAN 
PEOPLE  HAVE,  IN  THE  SPIRIT  OF  BROTHERHOOD,  HELPED  US  IN  EVERY  WAR. 


50 


ON  A  PER  CAPITA  BASIS  THERE  ARE  MORE  VETERANS  IN  INDIAN  COUNTRY  THAN 
IN  THE  REST  OF  THE  NATION.   ON  A  PER  CAPITA  BASIS.  MORE  INDIANS  HAVE  GIVEN  UP 
THEIR  LIVES  AND  THEIR  LIMBS  THAN  ANY  OTHER  ETHNIC  GROUP. 

MR.  CHAIRMAN.  THEY  HAVE  PAID  THEIR  DUES.   I  BELIEVE  THE  TIME  HAS  COME 
FOR  THIS  NATION  TO  RECIPROCATE. 


51 

Mr.  Richardson.  Thank  you,  Senator  Inouye. 
The  chair  recognizes  the  distinguished  vice  chairman,  my  col- 
league and  neighbor  from  Arizona,  John  McCain. 

STATEMENT  OF  HON.  JOHN  McCAIN,  A  U.S.  SENATOR  FROM 
THE  STATE  OF  ARIZONA,  AND  VICE  CHAIRMAN,  SENATE 
COMMITTEE  ON  INDIAN  AFFAIRS 

Senator  McCain.  Thank  you,  Mr.  Chairman,  and  I  want  to  thank 
you  for  holding  this  hearing.  I  also  want  to  express  my  appreciation 
for  your  and  Congressman  Thomas's  stewardship  of  a  much  needed 
Subcommittee  on  Indian  Affairs.  We  appreciate  the  working  rela- 
tionship that  we  have,  and  I  am  optimistic  about  our  ability  to  con- 
tinue to  work  on  behalf  of  Native  Americans  not  only  on  this  issue 
but  many  others,  and  I  am  grateful  for  the  many-year  commitment, 
Mr.  Chairman,  you  have  had  to  Native  Americans  both  in  your 
State  and  mine. 

Mr.  Chairman,  I  want  to  just  discuss  the  Act  with  you  for  a 
minute  and  then  talk  about  one  of  the  major  issues  of  this  hearing, 
and  that  is  the  issue  of  organized  crime  and  its  involvement  in  In- 
dian gaming. 

As  you  Imow,  Mr.  Chairman,  the  Cabazon  decision  held  that  if 
a  State  civilly  regulates  any  form  of  gaming,  then  the  tribes  in  that 
State  can  engage  in  that  activity  free  of  State  regulation.  Remem- 
ber that  all  of  this  began  with  the  Cabazon  decision.  The  Cabazon 
decision  also  held  that  if  a  State  law  criminally  prohibits  a  form 
of  gambling,  then  the  tribes  within  that  State  cannot  engage  in 
that  activity. 

Let's  make  it  clear,  Mr.  Chairman.  If  a  State  wants  to  criminally 
prohibit  gaming  in  their  State,  then  the  Indians  cannot  engage  in 
gaming  in  that  State,  and  that  is  something,  I  think,  that  is  ne- 
glected quite  a  bit. 

Under  the  Act,  as  you  know,  it  says  that  the  States  can  deter- 
mine what  gaming  activity  is  permitted,  and  at  the  insistence  of 
the  States  in  the  non-Indian  gaming  industry,  the  Act  further  re- 
stricted tribal  rights  by  requiring  a  tribal-State  compact  for  most 
forms  of  gaming,  except  bingo  and  pull  tabs. 

Mr.  Chairman,  let  the  record  show  that  the  Act  has  worked  well 
in  those  States  where  the  parties  wanted  it  to  work.  There  are  now 
76  compacts  in  12  States  in  this  country,  12  in  my  own  State  of 
Arizona,  and  where  the  State  and  Indian  interests  have  come  to- 
gether and  sat  down  and  negotiated  in  honest  good  faith,  there 
have  been  successful  compacts  agreed  to. 

Let  me  also  mention,  Mr.  Chairman,  what  you  said  at  the  begin- 
ning of  the  hearing.  Accidental  deaths,  the  death  rate  of  Indians 
is  295  percent  greater  than  U.S.  rates;  the  suicide  rate  among  Indi- 
ans is  95  percent  greater;  high  school  dropout,  35  percent  greater; 
unemployment;  and  on  and  on.  The  statistics  are  appalling  and 
egregious  and  outrageous,  and  you  and  I  and  Senator  Inouye,  and 
every  member  of  this  committee  has  worked  for  years  on  the  an- 
swer, and  the  answer  is  economic  development,  and  we  have  failed, 
and  all  you  have  to  do  is  visit  a  reservation  in  your  State  or  mine, 
and  we  know  that  we  have  failed. 

What  has  provided  funds  for  these  much  needed  programs?  Not 
the  Federal  Grovemment  but  Indian  gaming.  I  don't  like  Indian 


52 

gaming,  you  don't  like  Indian  gaming,  others  may  not  like  Indian 
gaming.  The  fact  is,  Indian  gaming  has  provided  much  needed  rev- 
enues to  provide  these  people  with  an  opportunity  which  we  owe 
all  of  our  citizens. 

I  just  want  to  finally,  Mr,  Chairman,  talk  about  one  issue,  the 
possibility  or  likelihood  of  organized  crime  infiltration  into  Indian 
gaming.  Senator  Inouye's  leadership  led  us  to  a  hearing  on  March 
18,  1992.  One  of  the  witnesses  was  Mr.  Paul  Maloney,  senior  coun- 
sel for  policy  of  the  Criminsd  Division  of  the  Justice  Department. 
Mr.  Chairman,  I  ask  unanimous  consent  that  his  entire  statement 
be  made  part  of  the  record. 

Mr.  Richardson.  Without  objection. 

[Prepared  statement  of  Mr.  Maloney  follows:] 


53 


g^parlmntt  of  |ustue 


STATEMENT 
OF 


PAUL  L.  MALONEY 

SENIOR  COUNSEL  FOR  POLICY 

CRIMINAL  DIVISION 


BEFORE 
THE 


SELECT  COMMITTEE  ON  INDIAN  AFFAIRS 
UNITED  STATES  SENATE 


CONCERNING 
INDIAN  GAMING  REGULATORY  ACT 

ON 
MARCH  18,  1992 


54 


Mr.  Chairman  and  Members  of  the  Cosunittee  — 

My  name  is  Paul  L.  Maloney,  and  I  am  Senior  Counsel  for  Policy 
in  the  Department  of  Justice  Criminal  Division.  With  ne  once  again 
is  the  Honorable  Linda  A.  Akers,  United  States  Attorney  for  the 
District  of  Arizona  and  Chair  of  the  Indian  Affairs  Subcommittee  of 
the  Attorney  General's  Advisory  Committee  of  United  States 
Attorneys.  Also  accompanying  me  is  Jim  E.  Moody,  Chief  of  the 
Organized  Crime  Section  of  the  Federal  Bureau  of  Investigation. 

As  I  stated  in  my  testimony  on  February  5th,  the  Department  of 
Justice  is  dedicated  to  respond  promptly  to  serious  and  flagrant 
non-compliance  with  Indian  gaming  laws.  The  Department  of  Justice 
will  utilize  its  enforcement  weapons  against  operations  conducted 
without  tribal  sanctions  or  where  there  is  evidence  of  organized 
crime  infiltration,  skimming  or  other  forms  of  crime.  For  example, 
several  prosecutions  were  brought  against  private  entrepreneurs 
operating  casinos  in  violation  of  tribal,  state  and  federal  laws  on 
the  St.  Regis  Mohawk  reservation  in  the  Northern  District  of  New 
York;  casinos  operated  without  tribal  authority  were  closed  down  in 
the  District  of  Montana  and  the  Eastern  District  of  Oklahoma;  a 
casino  operation  in  the  Northern  District  of  California  was  closed 
down  when  reports  of  skimming  by  the  manager,  allegedly  an 
associate  of  organized  crime  figures,  was  investigated;  and,  in  the 
Southern  District  of  California,  an  Indian  official  was  convicted 
of  embezzlement,  and  his  wife  of  income  tax  violations,  arising  out 
of  his  skimming  from  the  tribal  gaming  establishment  he  managed. 


55 


2 
But  I  wish  to  reiterate  and  emphasize  what  I  stated  earlier: 
The  perception  in  the  media  and  elsewhere  that  Indian  gaming 
operations  are  rife  with  serious  criminality  does  not  stand  up 
under  close  examination.  Under  analysis,  the  contention  breaks 
down  into  three  assertions  -  that  the  tribal  games  have  been 
infiltrated  by  organized  crime  families;  that,  they  have  been 
victimized  by  criminal  elements  not  associated  with  the  major  crime 
families;  or  that  the  tribes  are  conducting  illegal  gaming. 

Insofar  as  organized  crime  is  concerned,  the  Department  of 
Justice  believes  that  to  date  there  has  not  been  a  widespread  or 
successful  effort  by  organized  crime  to  infiltrate  Indian  gaming 
operations.  For  several  years  the  FBI  has  focussed  its  efforts  on 
monitoring  those  organizations  and  their  associates  to  apprehend 
them  as  they  engage  in  illegal  activity  or  attempt  to  infiltrate 
legitimate  enterprises.  This  kind  of  investigation  revealed  the 
attempt  -  which  did  not  succeed  -  to  infiltrate  the  gaming 
operation  of  the  Rincon  Band  in  California  that  I  informed  you  last 
time  resulted  in  the  indictment  of  ten  men  on  charges  of 
racketeering,  extortion,  mail  fraud  and  wire  fraud.  The  FBI, 
moreover,  informs  me  that  there  are  at  present  fewer  than  five  open 
investigations  of  organized  crime  family  activity  relating  to 
gaming  on  Indian  lands.  As  monitoring  those  families  is  one  of  the 
FBI's  highest  priorities,  I  am  confident  that  should  evidence  of 
federal  crime  develop  it  will  be  fully  investigated  and  referred  to 
the  United  States  Attorneys  for  appropriate  action. 


56 


3 
Furthermore,  there  has  also  been  little  evidence  of  criminal 
activity  committed  by  criminal  elements  not  associated  with  the 
major  organized  crime  families.  Again,  on  those  occasions  when 
such  allegations  have  been  brought  to  our  attention,  they  have  been 
investigated,  and  when  sufficient  evidence  is  developed  for 
conviction,  we  have  not  hesitated  to  prosecute.  One  such  case  is 
that  of  the  Indian  official  who  skimmed  the  receipts  of  his  tribe's 
bingo  hall.  I  am  informed  that  there  are  a  handful  of 
investigations  into  allegations  of  similar  misconduct  now  being 
conducted. 

Finally,  we  come  to  the  assertion  of  "illegal  gaming."  This 
label  also  covers  different  kinds  of  regulatory  violations.  One 
set  is  gaming  that  is  not  operated  under  tribal  auspices,  and 
therefore  cannot  be  legal  under  any  circximstances.  To  my 
knowledge,  all  such  operations  have  been  shut  down.  They  include 
the  St.  Regis  casinos  and  those  on  Crow  and  Choctaw  lands. 

The  other  set  of  allegedly  illegal  gaming  is  gaming  under 
tribal  auspices.  It  would  appear  that  all  of  the  games  so 
identified  are  instances  in  which  the  characterization  of  the 
gaming  as  illegal  means  gaming  believed  to  fall  in  class  III  under 
the  Indian  Gaming  Regulatory  Act  (IGRA)  that  is  being  conducted 
without  the  benefit  of  a  compact  negotiated  with  the  state.  In 
some  cases  the  classification  is  in  dispute,  with  the  tribes 
claiming  it  properly  falls  in  class  II,   Until  the  National  Indian 


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4 

Gaming  Commission  (NIGC)  issues  its  final  definition  regulations 
later  this  year,  it  cannot  be  said  with  positive  assurance  that 
such  gaming  is  not  class  II.  In  other  instances  of  admitted  class 
III  gaming,  the  state  and  tribes  are  in  the  course  of  negotiation 
that  will  result  in  compacts  allowing  or  disallowing  the  games.  In 
still  other  cases  the  state  has  declined  to  include  certain  games 
within  the  compact  and  the  tribe  is  expected  to  discontinue  the 
games  or  file  suit  under  the  IGRA,  if  it  has  not  already  done  so. 
In  still  other  cases  suits  have  been  filed  because  the  whole 
negotiation  process  has  reached  an  impasse.  Thus,  at  the  moment, 
as  I  previously  testified,  the  illegality  of  the  challenged  games 
is  in  doubt  or  in  dispute.  In  these  instances,  the  United  States 
Attorneys  are  faced  with  the  difficult  decision  to  allocate  scarce 
investigative  and  prosecutorial  resources  against  these  alleged 
tribal  regulatory  violations  when  there  are  so  few  that  could  not 
colorably  be  legitimated  under  the  IGRA  through  Commission,  state 
or  judicial  action,  and  are  in  the  process  of  resolution. 

This  can  best  be  demonstrated  by  a  review  of  the  map  that 
Senator  DeConcini  asked  me  to  investigate  at  the  previous  hearing. 
That  map,  incidentally,  was  prepared  by  the  Department  of  the 
Interior  (DOI)  from  anecdotal  material  supplied  by  its  field  staff. 
The  map  is  an  outline  map  of  the  lower  48  states.  Within  the 
outlines  of  nine  states  are  a  total  of  41  orange  dots  which  the  key 
identifies  as  signifying  "illegal  gaming."  The  characterization  of 
gaming  as  illegal  represents  informal  information  which  may  or  may 


58 


5 
not  prove  correct  (e.g.,  that  the  gaming  is  class  III)  or  upon  a 
fact  situation  that  is  in  flux  (e.g.,  no  compact  is  in  existence). 
We  have  examined  the  status  of  the  gaming  activity  represented  by 
each  of  the  orange  dots  and  in  most  instances  the  tribes  are  either 
in  the  process  of  negotiation  with  the  state  or  the  tribes  have 
filed  suit  against  the  state  contending  that  the  state  has  not 
negotiated  in  good  faith.  In  other  instances,  where  those 
conditions  are  not  present,  the  operations  have  been  closed  down  by 
federal  and  local  law  enforcement. 

In  sum,  the  informal  survey  of  the  Department  of  the  Interior, 
when  properly  evaluated,  does  not  support  a  perception  that  there 
is  widespread  serious  criminal  activity  involving  gaming  on  Indian 
reservations.  What  you  have  is  gaming  of  questionable  legality  in 
the  process  of  moving  toward  compliance  with  the  IGRA.  If  the 
tribes  and  states  continue  in  good  faith  under  the  soon  to  be 
published  regulations  of  the  NIGC,  these  regulatory  violations, 
both  real  and  apparent,  will  cease  to  exist. 

The  Department  of  Justice  does  not  withdraw  its  repeated 
warnings  that  the  flow  of  currency  through  Indian  casinos  requires 
continuing  vigilance  to  avert  illegal  activities  such  as 
embezzlement,  fraud  and  money  laundering  and  to  protect  the  tribes' 
interests.  This  is  true  of  non-Indian  gaming  as  well.  Strict 
compliance  with  the  scheme  of  regulation  ordained  by  Congress  is  of 


59 


6 
Utmost  importance  to  insure  the  benefits  of  lawful  gaming  by  the 
Indian  tribes. 


•Mr.  Chairman,  this  concludes  my  statement  and  I,  along  with 
Ms.  Akers  and  Mr.  Moody,  would  be  glad  to  answer  any  questions  from 
you  and  members  of  the  Committee. 


60 

Senator  McCain.  On  page  2 — this  is  the  statement  by  Mr. 
Maloney — "But  I  wish  to  reiterate  and  emphasize  what  I  stated 
earUer.  The  perception  in  the  media  and  elsewhere  that  Indian 
gaming  operations  are  rife  with  serious  criminaUty  does  not  stand 
up  under  close  examination.  Insofar  as  organized  crime  is  con- 
cerned, the  Department  of  Justice  believes  that  to  date  there  has 
not  been  a  widespread  or  successful  effort  by  organized  crime  to  in- 
filtrate Indian  gaming  operations.  For  several  years,  the  FBI  has 
focused  its  efforts  on  monitoring  those  organizations  and  their  asso- 
ciates to  apprehend  them  as  they  engage  in  illegal  activity  or  at- 
tempt to  infiltrate  legitimate  enterprises.  This  kind  of  investigation 
revesded  the  attempt  which  did  not  succeed  to  infiltrate  the  gaming 
operation  of  the  Rincon  Band  in  California.  I  am  confident  that 
should  evidence  of  Federal  crime  develop,  it  will  be  fully  inves- 
tigated and  referred  to  the  United  States  attorneys  for  appropriate 
action." 

We  also  have  the  commitment  from  the  Justice  Department,  Mr. 
Chairman,  to  bring  to  our  attention  any  serious  evidence  that 
might  indicate  organized  crime  infiltrating. 

Mr.  Chairman,  I  want  to  say  something  we  all  know,  wherever 
there  is  gambling,  there  is  the  possibility  of  infiltration  of  criminal 
elements,  there  is  just  too  much  temptation  there,  but  to  come  be- 
fore this  committee  and  allege  that  organized  crime  is  infiltrating 
the  Indian  gaming  in  this  country  does  not  stand  up  with  the  testi- 
mony of  the  Department  of  Justice  whom  I  would  rely  upon. 

Finally,  Mr.  Chairman,  perhaps  the  most  revered  man  that  you 
and  I  have  had  the  privilege  of  serving  with  was  Morris  Udall.  In 
July  of  1988,  Morris  Udall  said  the  following:  "Mr.  Speaker,  the  In- 
dian tribes,  using  treaties  we  forced  upon  them,  laws  which  were 
passed  without  their  consent,  and  our  own  courts,  sued  to  vindicate 
their  right  to  self-government  so  jealously  guarded  by  them  and  so 
solemnly  promised  by  us.  They  went  to  our  courts  to  fight  for  their 
right  to  engage  in  gaming  activities  without  hindrance  by  State 
governments,  and  they  won.  In  the  economic  wasteland  of  the  res- 
ervations that  we  have  fostered,  some  of  the  tribes  have  found  a 
small  ray  of  hope  for  economic  betterment,  a  chance  for  better 
health,  better  education,  better  jobs,  a  better  future,  but  we  can't 
permit  that.  Powerful  economic  forces  have  mobilized  to  ensure 
that  it  does  not  happen.  And  what  is  the  justification  given  for  once 
again  breaking  our  word  to  the  Indians?  The  opponents  of  Indian 
gaming  activities  raise  the  specter  of  organized  crime.  In  15  years 
of  commercial  gaming  activity  on  Indian  reservations,  there  has  not 
been  one  clearly  proven  case  of  organized  crime  infiltrating  gaming 
activity.  Yes,  there  has  been  whispered  rumors  of  such  activities, 
and  yes,  there  is  potential,  and  I  do  share  that  concern." 

Finally,  Mr.  Chairman,  let  me  quote  from  Mr.  Udall  in  conclu- 
sion. In  July  1988,  Congressman  Mo  Udall  said, 

I  must  oppose  legislation  damaging  to  Indian  self-government  and  Indian  rights. 
It  may  be  that  an  intransigent  non-Indian  gaming  industry  has  the  economic  power 
and  poUtical  muscle  to  shove  State  rule  over  Indian  governments  down  the  throat 
of  the  tribes  or  to  simply  destroy  the  right  by  a  Federal  ban,  but  it  will  be  done 
without  my  consent  and  without  my  support. 


61 

Mr.  Chairman,  it  will  be  done  without  my  consent  and  without 
my  support.  I  thank  you,  Mr.  Chairman. 
[Prepared  statement  of  Mr.  McCain  follows:] 


62 


STATEMENT 

OF 

SENATOR  JOHN  M  'AIN 

BEFORE  THE 

SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

OF  THE 

COMMITTEE  ON  NATURAL  RESOURCES 

OVERSIGHT  HEARING  ON  THE  INDIAN  GAMING  REGULATORY  ACT 
OCTOBER  5,  1993 

Mr.  Chairman  and  Members  of  the  Subcommittee,  I  am  pleased 
to  be  here  with  you  today  and  I  thank  you  for  providing  this 
opportunity  to  appear  before  you.   I  also  want  to  associate 
myself  with  the  remarks  made  by  my  good  friend,  Senator  Inouye. 

During  the  102nd  Congress  the  Senate  Committee  on  Indian 
Affairs  held  three  oversight  hearings  to  determine  how  the  Indian 
Gaming  Regulatory  Act  was  being  implemented.   We  have  spent  much 
of  this  year  engaged  in  a  process  aimed  at  reaching  a  consensus 
between  state,  federal  and  tribal  government  officials  on  any 
amendments  to  the  Act  which  may  be  necessary  to  improve  its 
implementation.   This  process  has  already  yielded  genuine 
progress  and  we  remain  hopeful  that  it  will  soon  result  in  an 
agreement  on  amendments  to  the  Act. 

Based  on  our  experience  since  the  Act  was  enacted  in  1988,  I 
think  that  a  few  general  conclusions  can  be  reached  with  regard 
to  the  effectiveness  of  the  Act.   First,  it  is  clear  that  the  Act 
has  worked  well  in  every  state  where  the  parties  have  made  the 
effort  to  work  cooperatively.   On  the  other  hand,  where  the 
states  have  refused  to  negotiate,  the  Act  has  not  always  worked 
well  and  litigation  and  bitterness  have  replaced  cooperation  and 
successful  negotiations.   Overall,  the  Act  has  now  resulted  in  76 
compacts  in  twelve  states  to  govern  the  operation  of  Class  III 
gaming.   In  my  own  State  of  Arizona,  implementation  of  the  Act 
has  been  difficult  and  contentious.   This  year,  after  several 
years  of  failed  efforts  to  enter  into  compacts,  the  state  and 
twelve  tribes  have  now  reached  final  agreements  and  more 
agreements  are  likely  in  the  coming  months. 

Since  1988,  Indian  gaming  has  grown  from  gross  revenues  of 
about  $1  billion  to  $6  billion  in  1992.   Nationwide  Indian  gaming 
constitutes  about  3%  of  all  gaming  activity.   Net  revenues  from 
Indian  gaming  in  1992  were  estimated  at  $750  million  and  were 
primarily  used  to  provide  tribal  members  with  education,  health 
care,  employment  and  the  infrastructure  necessary  for  economic 
growth  and  development. 

The  second  conclusion  which  can  be  reached  is  that  the  fears 
which  have  been  raised  over  the  years  about  the  infiltration  of 
Indian  gaming  by  organized  crime  are  false  and  unfounded.  The 


63 


Senior  Counsel  for  Policy  of  the  Criminal  Division  of  the 
Department  of  Justice  testified  before  the  Senate  Committee  on 
Indian  Affairs  on  March  18,  1992  and  stated: 

Insofar  as  organized  crime  is  concerned,  the  Department  of 
Justice  believes  that  to  date  there  has  not  been  a 
widespread  or  successful  effort  by  organized  crime  to 
infiltrate  Indian  gaming  operations.  .  .  .  Furthermore, 
there  has  been  little  evidence  of  criminal  activity 
committed  by  criminal  elements  not  associated  with  the  major 
organized  crime  families. 

The  simple  fact  of  the  matter  is  that  there  has  been  very  little 
criminal  activity  associated  with  Indian  gaming.   In  large  part 
the  reason  for  this  has  been  the  vigilance  of  the  tribal 
governments.   They  know  as  well  or  better  than  any  of  us  that  any 
criminal  activity  will  ruin  their  chances  to  make  gaming  the 
viable  economic  activity  which  it  has  shown  it  can  be  on  so  many 
Indian  reservations. 

Mr.  Chairman,  I  believe  that  it  would  serve  the  Subcommittee 
and  the  entire  Congress  well  to  remember  the  words  of  our 
colleague,  the  distinguished  former  Chairman  of  the  Committee  on 
Interior  and  Insular  Affairs,  Morris  Udall.   On  July  6,  1988,  a 
few  short  months  before  the  Indian  Gaming  Regulatory  Act  was 
enacted.  Chairman  Udall  addressed  the  House  on  the  issue  of 
Indian  gaming  generally  and  the  fear  of  organized  crime  in 
particular: 

Mr.  Speaker,  the  Indian  tribes,  using  treaties  we  forced 
upon  them,  laws  which  were  passed  without  their  consent,  and 
our  own  courts,  sued  to  vindicate  their  right  to  self- 
government,  so  jealously  guarded  by  them  and  so  solemnly 
promised  by  us.   They  went  to  our  courts  to  fight  for  their 
right  to  engage  in  gaming  activities  without  hindrance  by 
State  governments.   And  they  won. 

In  the  economic  wasteland  of  the  reservations  that  we  have 
fostered,  some  of  the  tribes  have  found  a  small  ray  of  hope 
for  economic  betterment.   A  chance  for  better  health,  better 
education,  better  jobs,  a  better  future.   But  we  can't 
permit  that.   Powerful  economic  forces  have  mobilized  to 
ensure  that  it  does  not  happen. 

The  most  effective  way  to  prevent  it  is  to  take  away  their 
right  to  self-government  to  make  that  choice  for  themselves 
and  to  subject  them  to  the  laws  and  the  jurisdiction  of  the 
States.   And  that  is  what  we  are  asked  to  do — to  destroy 
that  tribal  right  of  self-government  by  unilaterally 
imposing  upon  them  State  rule. 

And  what  is  the  justification  given  for  once  again  breaking 
our  word  to  the  Indians?  The  opponents  of  Indian  gaming 
activities  raise  the  specter  of  organized  crime.   In  15 


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years  of  commercial  gaming  activity  on  Indian  reservations, 
there  has  not  been  one  clearly  proven  case  of  organized 
crime  infiltrating  Indian  gaming.   Yes  there  has  been 
whispered  rumors  of  such  activity.  And  yes,  there  is  a 
potential  and  I  too  share  that  concern. 

However  the  opponents  of  Indian  gaming,  with  little 
evidence,  assert  that  the  infiltration  of  organized  crime  is 
a  clear  and  present  danger  and  the  only  remedy  is  State 
jurisdiction.   They  say  the  Tribes  and  Federal  government 
cannot  handle  organized  crime;  only  the  states  can.   They 
would  have  us  believe  that  the  FBI,  the  Justice  Department 
and  other  federal  law  enforcement  agencies  cannot  do  what 
the  states  can. 

Mr.  Chairman,  here  we  are  five  years  after  enactment  of  the 
Indian  Gaming  Regulatory  Act  and  we  find  the  opponents  of  Indian 
gaming  making  the  exact  same  arguments  which  Chairman  Udall  noted 
in  July  of  1988.   Even  a  casual  reading  of  some  of  the  bills 
which  have  recently  been  introduced  to  amend  the  Act  demonstrates 
this  fact.   For  example,  the  proponents  of  H.R.  2287,  the  Gaming 
Regulatory  and  State  Law  Enforcement  Act  of  1993  claim  that  there 
is  a  law  enforcement  crisis  in  Indian  gaming  which  can  only  be 
rectified  by  placing  Indian  gaming  totally  under  state  control 
and  greatly  limiting  Indian  gaming  activity.   There  is  no  law 
enforcement  crisis.   Legislation  of  this  type  is  intended  to 
destroy  Indian  gaming.   Nothing  more  and  nothing  less. 

To  this  extent,  little  has  changed  in  the  five  years  since 
the  Act  became  law.   On  August  3,  1988  the  Senate  Committee  on 
Indian  Affairs  filed  its  report  on  S.555,  the  bill  which  became 
the  Indian  Gaming  Regulatory  Act.  In  my  Additional  Views  which 
accompanied  the  report,  I  noted  that: 

As  the  debate  unfolded,  it  became  clear  that  the 
interests  of  the  states  and  of  the  gaming  industry 
extended  far  beyond  their  expressed  concern  about 
organized  crime.   Their  true  interest  was  protection  of 
their  own  games  from  a  new  source  of  economic 
competition....  the  States  and  the  gaming  industry  have 
always  come  to  the  table  with  the  position  that  what  is 
theirs  is  theirs  and  what  the  Tribes  have  is 
negotiable. 

The  States  and  the  non-Indian  gaming  industry  prevailed  in  many 
ways  in  the  Indian  Gaming  regulatory  Act.   The  Act  embodies  a 
significant  infringement  on  tribal  rights  of  self -governance.   As 
the  members  of  the  Subcommittee  know,  the  Act  is  premised  on  the 
Supreme  Court's  decision  in  the  Cabazon  case.   The  Court  found 
that  if  state  law  criminally  prohibits  a  form  of  gambling,  then 
the  tribes  within  that  state  may  not  engage  in  that  activity.   If 
on  the  other  hand,  state  law  civilly  regulates  a  form  of  gaming, 
then  the  tribes  in  that  state  can  engage  in  that  activity  free 


65 


from  state  control.   The  Act  takes  the  Cabazon  restriction  a  step 
further  with  its  requirement  that  Class  III  gaming  can  only  be 
conducted  pursuant  to  an  approved  tribal/state  compact.   This 
provision  was  included  in  the  Act  over  the  objections  of  most 
tribes  and  at  the  insistence  of  the  states  and  the  non-Indian 
commercial  gaming  industry. 

The  States,  not  the  Tribal  or  Federal  governments, 
determine  what  gaming  activity,  if  any,  will  ultimately  be 
permitted.   Despite  this  fact,  it  is  apparent  that  some  states 
and  some  non-Indian  gaming  operators  are  once  again  anxious  to 
destroy  Indian  gaming  to  eliminate  it  as  a  competitive  force. 

If  I  may,  I  would  like  to  once  again  refer  to  the  remarks  of 
Chairman  Udall  in  July  of  1988: 

...  I  must  oppose  legislation  damaging  to  Indian  self- 
government  and  Indian  rights.   It  may  be  that  an 
intransigent  non-Indian  gaming  industry  has  the  economic 
power  and  political  muscle  to  shove  State  rule  over  Indian 
governments  down  the  throat  of  the  tribes  or  to  simply 
destroy  the  right  by  a  federal  ban.   But  it  will  be  done 
without  my  consent  and  without  my  support. 


66 

Mr.  Richardson.  I  thank  the  gentleman. 

The  chair  recognizes  a  leader  in  this  House  on  many  issues  on 
law  enforcement  and  crime,  and  we  are  pleased  that  the  gentleman 
from  New  Jersey,  the  Honorable  Bill  Hughes  from  the  Second  Dis- 
trict, is  here. 

Please  proceed.  Bill. 

STATEMENT  OF  HON.  WILLIAM  J.  HUGHES,  A  REPRESENTA- 
TIVE IN  CONGRESS  FROM  THE  STATE  OF  NEW  JERSEY 

Mr.  Hughes.  Thank  you  very  much,  Mr.  Chairman.  Good  morn- 
ing, and  thank  you  very  much  for  inviting  me  to  testify  here  today 
before  this  most  distinguished  subcommittee. 

At  the  outset,  I  would  like  to  extend  my  thanks  to  you,  Chairman 
Richardson,  Chairman  George  Miller,  and  other  members  of  this 
panel  for  the  courtesies  you  have  extended  to  me  these  past  several 
months  in  our  discussions  about  the  Indian  Gaming  Act. 

I  am  really  very  pleased  that  you  understand  both  the  problems 
which  exist  with  the  current  Indian  Gaming  Regulatory  Act  and 
the  need  to  make  some  reforms,  particularly  in  the  regulatory  as- 
pects of  the  law.  I  look  forward  to  continuing  our  dialogue  and  to 
working  with  you  to  develop  remedies  which  are  in  the  public  in- 
terest and  are  fair  and  reasonable  to  all  parties  involved. 

As  the  committee  knows,  it  has  been  six  years  since  Congress 
voted  to  sanction  gambling  operations  on  Indian  reservations. 
While  I  believe  the  intent  of  the  law  was  to  balance  both  the  State 
interests,  including  effective  enforcement,  and  Indian  sovereignty 
concern,  I  feel  the  Act  has  fallen  short  in  many  respects. 

At  the  time  of  enactment,  I  did  not  believe  that  the  Act  would 
guarantee  that  a  carefully  constructed  and  effective  regulatory 
framework  would  be  put  in  place  to  keep  the  gaming  activities 
clean  and  consistent  with  State  laws,  regulations,  and  economic 
and  other  interests.  I  also  believed  that  the  compact  negotiation 
process  for  Class  3  gaming  was  essentially  unworkable  and  would 
merely  spawn  conflict  and  litigation.  Unfortunately,  many  of  my 
concerns  are  now  realized. 

What  started  out  as  an  effort  to  recognize  the  right  of  Indian 
tribes  to  conduct  carefully  regulated  forms  of  legalized  gambling 
has  since  led  to  the  proliferation  of  high-stakes  gaming  activities 
among  some  71  tribes  in  18  different  States  without  the  safeguards 
that  would  balance  all  State  interests  that  we  have  a  right  to  ex- 
pect. 

I  am  concerned  that  many  of  these  gaming  operations  are  not 
subject  to  adequate  licensing,  supervisory,  or  enforcement  mecha- 
nisms which  are  capable  of  dealing  with  high-staking  gambling  and 
the  many  problems  associated  with  it.  This,  in  turn,  has  raised  se- 
rious concerns  that  the  gaming  operations  are  vulnerable  to  corrup- 
tion and  infiltration  of  organized  crime.  Just  as  importantly,  it  has 
raised  the  ire  of  many  local  citizens  who  fear  that  gaming  oper- 
ations are  being  forced  into  their  communities  without  their  con- 
sent. 

The  ambiguity  of  the  law  has  spawned  a  proliferation  of  lawsuits, 
as  I  mentioned,  between  Indian  tribes  and  the  States  rather  than 
encouraging  the  type  of  good-faith  negotiations  which  were  the  in- 
tent of  the  1988  Act. 


67 

While  there  is  some  consensus  on  the  problems  that  the  Indian 
Gaming  Act  has  created,  there  is  little  agreement  on  the  solutions. 
Indeed,  there  is  no  consensus  even  within  the  gaming  industry  in 
my  own  area,  Atlantic  City,  which  is  located  in  the  district  that  I 
have  the  privilege  to  represent. 

For  that  reason,  I  have  asked  the  New  Jersey  Casino  Associa- 
tion, which  has  tremendous  experience  and  expertise,  to  put  to- 
gether a  working  group  and  to  advise  me  on  this  most  important 
and  highly  complex  issue.  Hopefully,  this  working  group  can  also 
complement  the  ongoing  efforts  of  the  States  and  Indian  tribes  to 
resolve  their  differences,  and  I  salute  the  Senator,  Senator  Inouye, 
and  Senator  McCain,  and  others  who  are  working  with  the  gov- 
ernors and  other  interests  to  try  to  bring  some  resolution  to  this 
very,  very  difficult  and  complex  issue,  or  series  of  issues. 

Task  forces  have  been  established  by  the  National  Governors  As- 
sociation, the  Association  of  Attorneys  General,  and  that  is  what 
has  been  involved  in  the  ongoing  negotiations,  and  I  am  happy  that 
we  have  a  meeting,  I  think  scheduled  for  October  19,  that  may  see 
a  resolution  of  these  very  difficult  issues.  I  applaud  those  efforts 
and  hope  they  will  lead  to  a  fair,  reasonable,  and  balances  resolu- 
tion of  the  concerns  which  many  of  us  have  raised. 

From  my  own  perspective,  I  believe  that  any  legislation  to  amend 
the  Indian  Gaming  Act  must  embody  one  basic  principle.  That  is, 
it  must  protect  the  integrity  of  any  gaming  operation  by  assuring 
this  it  adequately  regulates  and  enforces  and  ensures  that  it  does 
not  put  other  State-regulated  interests  at  a  competitive  disadvan- 
tage. The  latter  concern  was  specifically  recognized  by  the  1988  Act 
as  a  legitimate  and  important  factor  to  be  considered. 

For  instance,  in  my  own  State  of  New  Jersey,  we  have  tens  of 
thousands  of  jobs  involved,  and  billions  and  billions  of  dollars  in 
which  our  State  has  a  vital  interest.  It  is  my  belief  that  States  and 
their  citizens  have  the  right  to  insist  that  any  gaming  operation 
within  their  borders  receive  the  same  level  of  regulatory  scrutiny 
that  they  impose  on  their  own  licensees  and  play  by  the  same  rules 
mandated  by  the  State  for  non-Native  American  interests  in  that 
State. 

The  reason  for  this  is  not  so  much  a  sense  of  fairness  to  the  li- 
censees but  that  the  States  clearly  have  a  protectable  interest  in 
the  integrity  of  all  gaming  as  well  as  the  socioeconomic  well-being 
of  all  of  its  citizens. 

Moreover,  if  gaming  operations  are  allowed  to  take  place  on  an 
Indian  reservation  at  a  lower  level  of  scrutiny  than  that  which  is 
accorded  other  gaming  operations  in  the  State,  that  threatens  to 
undermine  the  public's  confidence  that  gaming  can  be  effectively 
run  and  supervised. 

As  long  as  States  are  going  to  be  required  to  agree  to  a  compact, 
as  the  Indian  Gaming  Regulatory  Act  now  provides,  then  I  believe 
the  Indian  gaming  operations  must  either  subject  themselves  to  the 
jurisdiction  of  their  States'  regulatory  system  or  be  required  to  es- 
tablish a  regulatory  system  of  their  own  which  is  comparable  to  the 
States'  in  every  respect.  Indeed,  I  believe  that  was  the  clear  intent 
of  the  1988  Act. 

Unfortunately,  the  Act  has  not  worked  as  well  as  was  intended. 
I  believe  the  New  Jersey  Casino  Control  Act  offers  a  model  to  not 


68 

only  regulate  the  gaming  industry  but  also  to  assure  the  public's 
confidence  in  the  integrity  and  credibility  of  the  entire  industry. 

In  fact,  I  read  with  great  interest  this  morning  after  I  received 
Jim  Moody's  testimony,  that  he  makes  the  same  suggestion.  He  is 
the  section  chief,  as  you  know,  of  the  Organized  Crime  Drug  Oper- 
ations Criminal  Investigative  Division  of  the  Federal  Bureau  of  In- 
vestigation. I  believe  that  that  Act  in  New  Jersey  is  well  reasoned, 
it  has  been  tested,  and  has  proven  to  be  effective. 

In  New  Jersey,  enforcement  of  the  Casino  Control  Act  is  divided 
among  two  agencies,  the  Casino  Control  Commission,  which  is  in 
charge  of  licensing  and  regulatory  affairs,  and  the  Division  of  Gam- 
ing Enforcement,  which  is  the  investigative  and  prosecutorial  agen- 
cy. At  the  present  time,  the  combined  staffs  of  these  two  agencies 
is  in  excess  of  850  personnel.  Their  combined  budgets  are  approxi- 
mately $56  million,  every  penny  of  which  is  paid  out  of  fees  and 
assessments  against  the  casino  industry  and  its  licensees. 

Some  of  what  the  Casino  Control  Commission  does  is  obvious; 
they  license  the  companies  and  the  people  who  work  for  the  compa- 
nies which  run  the  casinos;  they  also  supervise  and  set  the  rules 
for  the  games;  and  they  are  very  much  involved  in  supervising  the 
passage  of  money  and  the  control  of  credit.  Those  are  the  core  mis- 
sions of  the  CCC. 

But  there  is  more  to  the  regulatory  system  in  New  Jersey  than 
just  that.  The  State  also  licenses  and  regulates  any  business  that 
does  business  with  the  casinos  on  a  regular  basis.  This  includes  ca- 
sino-related operations  such  as  those  which  sell  cards  or  dice  to  the 
casinos  as  well  as  non-gaming  businesses  including  those  which 
sell  liquor,  food,  furniture,  and  so  forth.  The  State  investigates 
each  of  these  companies  as  well  as  their  principal  officers. 

In  addition,  any  company  which  is  involved  in  loaning  money  to 
a  casino  to  build  or  finance  the  construction  of  a  casino,  hotel,  or 
expand  it,  must  be  licensed  to  do  so.  As  a  result,  the  law  blankets 
the  casinos  themselves,  all  companies  which  do  business  with  them 
on  a  regular  basis,  and  all  the  financial  sources  of  the  casino  com- 
panies. 

I  point  this  out  because  I  believe  it  addresses  the  three  central 
issues  in  this  debate:  Where  will  the  regulation  of  Indian  gaming 
activities  take  place?  How  will  it  be  paid  for?  And  what  form  will 
it  take?  Once  again,  I  believe  the  New  Jersey  experience  provides 
an  excellent  model  for  addressing  each  of  these  concerns. 

Certainly  there  are  other  side  issues  to  be  addressed  as  well.  For 
example,  serious  questions  have  been  raised  about  the  efforts  by 
some  tribes  to  expand  their  enclaves  to  lands  which  are  not  a  part 
of  their  recognized  reservations.  I  find  that  particularly  troubling. 

At  the  present  time,  the  Indian  Gaming  Regulatory  Act  is  not 
providing  an  adequate  level  of  protection,  with  some  notable  excep- 
tions, I  might  say.  Indeed,  it  contains  loopholes  and  ambiguities 
which  cripple  its  effectiveness.  If  we  don't  act  to  soon  correct  the 
deficiencies  in  the  law,  it  is  only  a  matter  of  time  before  the 
public's  confidence  in  the  integrity  and  acceptance  of  systems  of  le- 
galized gaming  will  be  destroyed.  If  that  happens,  the  implications 
of  such  a  catastrophe  will  go  well  beyond  the  damage  to  any  indi- 
vidual casino  or  Indian  tribe  or  State.  It  will  undermine  the  public 


69 

confidence  in  our  ability  to  keep  organized  crime  and  other  ele- 
ments out  of  this  industry. 

Mr.  Chairman,  those  are  my  overall  concerns.  I  look  forward  to 
working  with  you  to  develop  a  framework  which  will  enable  us  to 
address  these  serious  concerns.  I  thank  you  again  and  look  forward 
to  that  kind  of  cooperative  effort  that  I  have  seen  in  the  last  few 
months. 

Mr.  Richardson.  I  thank  the  gentleman. 

[Prepared  statement  of  Mr.  Hughes  follows:] 


70 


TESTIMONY  BY  THE  HONORABLE  WILLIAM  J.  HUGHES,  M.C. 
SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS,  OCT.  5,  1993 

THANK  YOU  VERY  MUCH,  MR.  CHAIRMAN.   I  AM  WILLIAM  J.  HUGHES, 
MEMBER  OF  CONGRESS,  REPRESENTING  NEW  JERSEY'S  SECOND 
CONGRESSIONAL  DISTRICT.   I  APPRECIATE  THE  OPPORTUNITY  TO  TESTIFY 
BEFORE  THIS  DISTINGUISHED  SUBCOMMITTEE  TODAY,  TO  SHARE  WITH  YOU 
SOME  OF  MY  THOUGHTS  AND  CONCERNS  ABOUT  INDIAN  GAMING. 

AT  THE  OUTSET,  I  WANT  TO  EXTEND  MY  THANKS  TO  YOU,  CHAIRMAN 
RICHARDSON,  AS  WELL  AS  FULL  COMMITTEE  CHAIRMAN  GEORGE  MILLER  AND 
OTHER  MEMBERS  OF  THIS  PANEL,  FOR  THE  COURTESIES  YOU  HAVE  EXTENDED 
TO  ME  THESE  PAST  MONTHS  IN  OUR  DISCUSSIONS  ABOUT  THE  INDIAN 
GAMING  ACT. 

I  AM  VERY  PLEASED  THAT  YOU  UNDERSTAND  BOTH  THE  PROBLEMS 
WHICH  EXIST  WITH  THE  CURRENT  INDIAN  GAMING  REGULATORY  ACT,  AND 
THE  NEED  TO  MAKE  SOME  REFORMS,  PARTICULARLY  IN  THE  REGULATORY 
ASPECTS  OF  THE  LAW.   I  LOOK  FORWARD  TO  CONTINUING  OUR  DIALOGUE, 
AND  TO  WORKING  WITH  YOU  TO  DEVELOP  REMEDIES  WHICH  ARE  IN  THE 
PUBLIC  INTEREST  AND  ARE  FAIR  TO  ALL  PARTIES  INVOLVED. 

AS  THE  COMMITTEE  KNOWS,  IT  HAS  BEEN  SIX  YEARS  SINCE  CONGRESS 
VOTED  TO  SANCTION  GAMBLING  OPERATIONS  ON  INDIAN  RESERVATIONS. 
WHILE  I  BELIEVE  THE  INTENT  OF  THAT  LAW  WAS  TO  BALANCE  BOTH  THE 
STATE  INTERESTS,  INCLUDING  EFFECTIVE  ENFORCEMENT,  AND  INDIAN 
SOVEREIGNTY  CONCERNS,  I  FEEL  THE  ACT  FELL  SHORT  OF  THAT  GOAL. 


71 


-2- 


AT  THE  TIME  OF  ENACTMENT,  I  DID  NOT  BELIEVE  THAT  THE  ACT 
WOULD  GUARANTEE  THAT  A  CAREFULLY  CONSTRUCTED  AND  EFFECTIVE 
REGULATORY  FRAMEWORK  WOULD  BE  PUT  IN  PLACE,  TO  KEEP  THE  GAMING 
ACTIVITIES  CLEAN  AND  CONSISTENT  WITH  STATE  LAWS,  REGULATIONS  AND 
ECONOMIC  AND  OTHER  INTERESTS. 

I  ALSO  BELIEVED  THAT  THE  COMPACT  NEGOTIATION  PROCESS  FOR 
CLASS  III  GAMING  WAS  ESSENTIALLY  UNWORKABLE,  AND  WOULD  MERELY 
SPAWN  CONFLICT  AND  LITIGATION.   UNFORTUNATELY,  MANY  OF  MY 
CONCERNS  ARE  NOW  BEING  REALIZED. 

WHAT  STARTED  OUT  AS  AN  EFFORT  TO  RECOGNIZE  THE  RIGHT  OF 
INDIAN  TRIBES  TO  CONDUCT  CAREFULLY  REGULATED  FORMS  OF  LEGALIZED 
GAMBLING,  HAS  SINCE  LED  TO  A  PROLIFERATION  OF  HIGH-STAKES  GAMING 
ACTIVITIES  AMONG  SOME  71  TRIBES  IN  18  DIFFERENT  STATES,  WITHOUT 
THE  SAFEGUARDS  THAT  WOULD  BALANCE  ALL  STATE  INTERESTS  THAT  WE 
HAVE  A  RIGHT  TO  EXPECT. 

I  AM  CONCERNED  THAT  MANY  OF  THESE  GAMING  OPERATIONS  ARE  NOT 
SUBJECT  TO  ADEQUATE  LICENSING,  SUPERVISORY  OR  ENFORCEMENT 
MECHANISMS,  WHICH  ARE  CAPABLE  OF  DEALING  WITH  HIGH-STAKES 
GAMBLING  AND  THE  MANY  PROBLEMS  ASSOCIATED  WITH  IT.   THIS,  IN 
TURN,  HAS  RAISED  SERIOUS  CONCERNS  THAT  THE  GAMING  OPERATIONS  ARE 
VULNERABLE  TO  CORRUPTION  AND  INFILTRATION  BY  ORGANIZED  CRIME. 

JUST  AS  IMPORTANTLY,  IT  HAS  RAISED  THE  IRE  OF  MANY  LOCAL 
CITIZENS,  WHO  FEAR  THAT  GAMBLING  ACTIVITIES  ARE  BEING  FORCED  INTO 
THEIR  COMMUNITIES  WITHOUT  THEIR  CONSENT.   THE  AMBIGUITY  OF  THE 
LAW  HAS  ALSO  SPAWNED  A  PROLIFERATION  OF  LAWSUITS  BETWEEN  INDIAN 
TRIBES  AND  THE  STATES,  RATHER  THAN  ENCOURAGING  THE  TYPE  OF  GOOD- 
FAITH  NEGOTIATIONS  WHICH  WERE  THE  INTENT  OF  THE  1988  ACT. 


72 


-3- 


WHILE  THERE  IS  SOME  CONSENSUS  ON  THE  PROBLEMS  WHICH  THE 
INDIAN  GAMING  ACT  HAS  CREATED,  THERE  IS  LITTLE  AGREEMENT  ON  THE 
SOLUTIONS.   INDEED,  THERE  IS  NO  CONSENSUS  EVEN  WITHIN  THE  GAMING 
INDUSTRY  IN  ATLANTIC  CITY,  WHICH  IS  LOCATED  IN  THE  DISTRICT  THAT 
I  HAVE  THE  PRIVILEGE  TO  REPRESENT. 

FOR  THAT  REASON,  I  HAVE  ASKED  THE  NEW  JERSEY  CASINO 
ASSOCIATION--WHICH  HAS  TREMENDOUS  EXPERIENCE  AND  EXPERTISE--TO 
PUT  TOGETHER  A  WORKING  GROUP  TO  AND  ADVISE  ME  ON  THIS  MOST 
IMPORTANT  AND  HIGHLY  COMPLEX  ISSUES. 

HOPEFULLY,  THIS  WORKING  GROUP  CAN  ALSO  COMPLEMENT  THE 
ONGOING  EFFORTS  OF  THE  STATES  AND  INDIAN  TRIBES  TO  RESOLVE  THEIR 
DIFFERENCES. 

TASK  FORCES  HAVE  ALSO  BEEN  ESTABLISHED  BY  THE  NATIONAL 
ASSOCIATION  OF  ATTORNEYS  GENERAL  AND  THE  NATIONAL  GOVERNORS 
ASSOCIATION.   THESE  TASK  FORCES  AND  REPRESENTATIVES  OF  INDIAN 
TRIBES  HAVE  BEEN  MEETING  TO  STUDY  AND  MAKE  RECOMMENDATIONS  TO  THE 
CONGRESS,  ON  HOW  TO  IMPROVE  THE  STATUTORY  FRAMEWORK  FOR  THE 
REGULATION  OF  GAMBLING  ON  INDIAN  LANDS. 

I  APPLAUD  THESE  EFFORTS  AND  HOPE  THEY  WILL  LEAD  TO  A  FAIR, 
REASONABLE  AND  BALANCED  RESOLUTION  OF  THESE  CONCERNS  WHICH  THE 
CONGRESS  CAN  CONSIDER  AND,  HOPEFULLY,  EMBRACE. 

FROM  MY  OWN  PERSPECTIVE,  I  BELIEVE  THAT  ANY  LEGISLATION  TO 
AMEND  THE  INDIAN  GAMING  REGULATORY  ACT  MUST  EMBODY  ONE  BASIC 
PRINCIPLE.   THAT  IS,  IT  MUST  PROTECT  THE  INTEGRITY  OF  ANY  GAMING 
OPERATION  BY  ASSURING  THAT  IT  IS  ADEQUATELY  REGULATED  AND 
ENFORCED,  AND  ENSURE  THAT  IT  DOES  NOT  PUT  OTHER  STATE-REGULATED 
INTERESTS  AT  A  COMPETITIVE  DISADVANTAGE. 


73 


-4- 


THE  LATTER  CONCERN  WAS  SPECIFICALLY  RECOGNIZED  BY  THE  1988 
ACT  AS  A  LEGITIMATE  AND  IMPORTANT  FACTOR  TO  BE  CONSIDERED. 

IT  IS  MY  BELIEF  THAT  STATES  AND  THEIR  CITIZENS  HAVE  THE 
RIGHT  TO  INSIST  THAT  ANY  GAMING  OPERATION  WITHIN  THEIR  BORDERS 
RECEIVE  THE  SAME  LEVEL  OF  REGULATORY  SCRUTINY  THAT  THEY  IMPOSE  ON 
THEIR  OWN  LICENSEES. 

THE  REASON  FOR  THIS  IS  NOT  SO  MUCH  A  SENSE  OF  FAIRNESS  TO 
THE  LICENSEES,  BUT  THAT  THE  STATES  CLEARLY  HAVE  A  PROTECTABLE 
INTEREST  IN  THE  INTEGRITY  OF  ALL  GAMING. 

IF  GAMING  OPERATIONS  ARE  ALLOWED  TO  TAKE  PLACE  ON  AN  INDIAN 
RESERVATION  AT  A  LOWER  LEVEL  OF  SCRUTINY  THAN  THAT  WHICH  IS 
ACCORDED  TO  OTHER  GAMING  OPERATIONS  IN  THE  STATE,  THAT  THREATENS 
TO  UNDERMINE  THE  PUBLIC'S  CONFIDENCE  THAT  GAMING  CAN  BE 
EFFECTIVELY  RUN  AND  SUPERVISED. 

AS  LONG  AS  STATES  ARE  GOING  TO  BE  REQUIRED  TO  AGREE  TO  A 
COMPACT,  AS  THE  INDIAN  GAMING  REGULATORY  ACT  NOW  PROVIDES,  THEN  I 
BELIEVE  THE  INDIAN  GAMING  OPERATIONS  MUST  EITHER  SUBJECT 
THEMSELVES  TO  THE  JURISDICTION  OF  THEIR  STATE'S  REGULATORY 
SYSTEM,  OR  BE  REQUIRED  TO  ESTABLISH  A  REGULATORY  SYSTEM  OF  THEIR 
OWN  WHICH  IS  COMPARABLE  TO  THE  STATE'S  IN  EVERY  RESPECT. 

INDEED,  I  BELIEVE  THAT  WAS  THE  CLEAR  INTENT  OF  THE  1988  ACT. 
UNFORTUNATELY,  THE  ACT  HAS  NOT  WORKED  AS  WELL  AS  IT  WAS  INTENDED. 

BY  COMPARISON,  I  BELIEVE  THE  NEW  JERSEY  CASINO  CONTROL  ACT 
OFFERS  A  MODEL  TO  NOT  ONLY  REGULATE  THE  GAMING  INDUSTRY,  BUT  ALSO 
TO  ASSURE  THE  PUBLIC'S  CONFIDENCE  IN  THE  INTEGRITY  AND 
CREDIBILITY  OF  THE  ENTIRE  INDUSTRY. 


74 


-5- 


IN  NEW  JERSEY,  ENFORCEMENT  OF  THE  CASINO  CONTROL  ACT  IS 
DIVIDED  AMONG  TWO  AGENCIES:  THE  CASINO  CONTROL  COMMISSION,  WHICH 
IS  IN  CHARGE  OF  LICENSING  AND  REGULATORY  AFFAIRS;  AND  THE 
DIVISION  OF  GAMING  ENFORCEMENT,  WHICH  IS  THE  INVESTIGATIVE  AND 
PROSECUTORIAL  AGENCY. 

AT  THE  PRESENT  TIME,  THE  COMBINED  STAFFS  OF  THESE  TWO 
AGENCIES  IS  IN  EXCESS  OF  850.   THEIR  COMBINED  BUDGETS  ARE 
APPROXIMATELY  $56  MILLION,  EVERY  PENNY  OF  WHICH  IS  PAID  FOR  OUT 
OF  FEES  AND  ASSESSMENTS  AGAINST  THE  CASINO  INDUSTRY  AND  ITS 
LICENSEES. 

SOME  OF  WHAT  THE  CASINO  CONTROL  COMMISSION  DOES  IS  OBVIOUS. 
THEY  LICENSE  THE  COMPANIES  AND  THE  PEOPLE  WHO  WORK  FOR  THE 
COMPANIES  WHICH  RUN  CASINOS.   THEY  ALSO  SUPERVISE  AND  SET  THE 
RULES  FOR  THE  GAMES,  AND  ARE  VERY  INVOLVED  IN  SUPERVISING  THE 
PASSAGE  OF  MONEY  AND  THE  CONTROL  OF  CREDIT.   THOSE  ARE  THE  CORE 
MISSIONS  OF  THE  CCC. 

BUT  THERE  IS  MORE  TO  THE  REGULATORY  SYSTEM  IN  NEW  JERSEY 
THAN  JUST  THAT. 

THE  STATE  ALSO  LICENSES  AND  REGULATES  ANY  BUSINESS  THAT  DOES 
BUSINESS  WITH  THE  CASINOS  ON  A  REGULAR  BASIS.  THIS  INCLUDES 
GAMING-RELATED  OPERATIONS,  SUCH  AS  THOSE  WHICH  SELL  CARDS  OR  DICE 
TO  THE  CASINOS,  AS  WELL  AS  NON-GAMING  BUSINESSES,  INCLUDING  THOSE 
WHICH  SELL  THEM  LIQUOR,  FOOD,  FURNITURE,  AND  SO  FORTH.  THE  STATE 
INVESTIGATES  EACH  OF  THESE  COMPANIES  AS  WELL  AS  THEIR  PRINCIPAL 
OFFICERS. 


75 


-6- 


IN  ADDITION,  ANY  COMPANY  WHICH  IS  INVOLVED  IN  LOANING  MONEY 
TO  A  CASINO  TO  BUILD  OR  FINANCE  THE  CONSTRUCTION  OF  A  CASINO- 
HOTEL,  MUST  BE  LICENSED  TO  DO  SO.   AS  A  RESULT,  THE  LAW  BLANKETS 
THE  CASINOS  THEMSELVES,  ALL  COMPANIES  WHICH  DO  BUSINESS  WITH  THEM 
ON  A  REGULAR  BASIS,  AND  ALL  THE  FINANCIAL  SOURCES  OF  THE  CASINO 
COMPANIES. 

I  POINT  THIS  OUT  BECAUSE  I  BELIEVE  IT  ADDRESSES  THE  THREE 
CENTRAL  ISSUES  IN  THIS  DEBATE:  WHERE  WILL  THE  REGULATION  OF 
INDIAN  GAMING  ACTIVITIES  TAKE  PLACE,  HOW  WILL  IT  BE  PAID  FOR,  AND 
WHAT  FORM  IT  WILL  TAKE. 

ONCE  AGAIN,  I  BELIEVE  THE  NEW  JERSEY  EXPERIENCE  PROVIDES  AN 
EXCELLENT  MODEL  FOR  ADDRESSING  EACH  OF  THESE  CONCERNS. 

CERTAINLY  THERE  ARE  OTHER  SIDE  ISSUES  TO  BE  ADDRESSED  AS 
WELL.   FOR  EXAMPLE,  SERIOUS  QUESTIONS  HAVE  BEEN  RAISED  ABOUT  THE 
EFFORTS  BY  SOME  TRIBES  TO  EXPAND  THEIR  ENCLAVES  TO  LANDS  WHICH 
ARE  NOT  A  PART  OF  THEIR  RECOGNIZED  RESERVATIONS.   I  FIND  THAT 
ESPECIALLY  TROUBLING. 

AT  THE  PRESENT  TIME,  THE  INDIAN  GAMING  REGULATORY  ACT  IS  NOT 
PROVIDING  AN  ADEQUATE  LEVEL  OF  PROTECTION,  WITH  SOME  NOTABLE 
EXCEPTIONS.   INDEED,  IT  CONTAINS  LOOPHOLES  AND  AMBIGUITIES  WHICH 
CRIPPLE  ITS  EFFECTIVENESS. 

IF  WE  DON'T  ACT  SOON  TO  CORRECT  THE  DEFICIENCIES  IN  THE  LAW, 
IT  IS  ONLY  A  MATTER  OF  TIME  BEFORE  THE  PUBLIC'S  CONFIDENCE  IN  THE 
INTEGRITY  AND  ACCEPTANCE  OF  SYSTEMS  OF  LEGALIZED  GAMING  WILL  BE 
DESTROYED. 


76 


-7- 


IF  THAT  HAPPENS,  THE  IMPLICATIONS  OF  SUCH  A  CATASTROPHE  WILL 
GO  WELL  BEYOND  THE  DAMAGE  TO  ANY  INDIVIDUAL  CASINO  OR  INDIAN 
TRIBE  OR  STATE.   IT  WILL  UNDERMINE  THE  PUBLIC  CONFIDENCE  IN  OUR 
ABILITY  TO  KEEP  ORGANIZED  CRIME  AND  OTHER  ELEMENTS  OUT  OF  THIS 
INDUSTRY . 

MR.  CHAIRMAN,  THESE  ARE  MY  OVERALL  CONCERNS.   I  LOOK  FORWARD 
TO  WORKING  WITH  YOU  TO  DEVELOP  A  FRAMEWORK  WHICH  WILL  ENABLE  US 
TO  ADDRESS  THESE  CONCERNS.   THANK  YOU  AGAIN  FOR  ALLOWING  ME  TO 
APPEAR  BEFORE  YOU  TODAY. 


#  #  # 


77 

/ 
Mr.  Richardson.  The  chair  recognizes  the  gentlfc. 
Jersey,  a  very  distinguished  member  of  this  body. 

STATEMENT  OF  HON.  MARGE  ROUKEMA,  A  REPRESENTAl  i . 
IN  CONGRESS  FROM  THE  STATE  OF  NEW  JERSEY 

Mrs.  ROUKEMA.  Thank  you,  Mr.  Chairman.  I  am  certainly  deeply 
grateful  to  you.  Chairman  Richardson,  for  permitting  me  the  oppor- 
tunity to  share  this  testimony  today  with  the  subcommittee. 

The  proliferation  of  Indian  gambling  is  a  serious  national  issue, 
and  it  is  a  very  serious  issue  in  New  Jersey,  particularly  in  my 
Fifth  Congressional  District.  Gaming,  casino  or  otherwise,  can 
produce  serious  consequences  for  the  host  community. 

It  would  take  months  to  address  all  the  sociological,  economic, 
moral,  legal,  and  law  enforcement  problems  associated  with  gam- 
bling. These  issues  are  so  serious  to  the  citizens  of  New  Jersey  that 
when  casino  gambling  was  proposed  for  Atlantic  City,  the  question 
was  subject  to  Statewide  referendum,  and  an  amendment  to  the 
State  Constitution  was  required. 

While  I  hope  that  the  subcommittee  will  address  each  of  the 
aforementioned  issues  in  subsequent  hearings,  I  come  before  you 
today  to  discuss  a  situation  presently  pending  in  my  district  which 
has  broad  Indian  gaming  ramifications  and  which  raises  some  seri- 
ous questions,  in  my  opinion,  about  illicit  financing  of  some  Indian 
gaming  operations. 

A  group  of  people  residing  in  parts  of  my  district  have  been  seek- 
ing Federal  recognition  as  a  Federal  Indian  tribe  for  nearly  20 
years.  When  representatives  of  the  Ramapough  Mountain  People 
first  approached  me  in  the  mid-1980's,  seeking  a  private  bill  rec- 
ognizing the  group  as  an  Indian  tribe,  I  was  skeptical  of  the  mo- 
tives behind  their  drive  for  recognition.  After  all,  this  was  a  clear 
attempt  to  circumvent  normal  procedures. 

To  this  day,  the  leaders  of  the  Ramapough  community  have 
maintained  that  their  sole  reason  for  seeking  Federal  acknowledg- 
ment is  to  improve  their  housing,  education,  and  social  welfare. 
However,  from  my  very  first  discussions  with  the  group  almost  10 
years  ago,  it  has  been  quite  clear  to  me  their  sole  interest  in  Fed- 
eral acknowledgment  is  to  circumvent  local.  State,  and  Federal  ju- 
risdiction for  the  sole  purpose  of  establishing  casino  gambling  in 
Bergen  County,  New  Jersey. 

No  member  of  the  group  has  ever  contacted  my  office  to  discuss 
improvement  in  housing  or  education.  They  are  integrated  with  the 
local  communities  and  have  been  for  some  time. 

On  November  20,  1985,  representatives  of  the  Ramapough  people 
signed  a  15-year  contract  with  Rory  Management  Corporation  of 
Elizabeth,  New  Jersey.  The  purpose  was  to  finance  the  group's  Fed- 
eral lobbying  efforts  in  return  for  a  percentage  of  future  gaming  op- 
eration profits. 

At  the  time,  the  president  of  Rory  Management  Corporation  was 
a  Mr.  Robert  Frank  of  Miami,  Florida,  who,  shortly  after  signing 
the  Ramapough  agreement,  resigned  as  president  of  a  similar  firm 
under  allegations  of  criminal  involvement  with  a  California  Indian 
tribe's  gaming  operations. 


78 

Subsequent  newspaper  reports  indicated  that  Rory  Management 
Corporation  was  prepared  to  spend  several  million  dollars  in  order 
to  secure  Federal  recognition,  land,  and  gaming  facilities  for  the 
Ramapough  group.  Mr.  Frank  was  to  receive  49  percent  of  the 
gaming  profits.  The  Ramapoughs  were  guaranteed  $29  million  over 
15  years. 

On  September  13,  1993,  an  article  appeared  in  the  New  Jersey 
Law  Journal  documenting  Mr.  Frank's  ties  to  organized  crime.  Ac- 
cording to  the  Journal,  he  has  had  long-standing  ties  to  Mafia 
bosses. 

Mr.  Chairman,  I  would  like  unanimous  consent  to  have  the  New 
Jersey  law  article  entered  into  the  record. 

Mr.  Richardson.  Without  objection. 

[The  article  follows:] 


79 


Was  Mob  Behind  Tribe's  Casino? 


By  Itn  O'Biioi 


The  HMD  wlxm  the  Raniapoiigh 
MouaaiD  f^ople  of  Bergea  County 
once  retained  to  hdp  them  gain  fed- 
eral reoognitiaa  is  a  bona  &de  Indian 
triK  —  and  mbvqacnlly  manage  any 
guniag  operatiaas  on  ibeir  reservation 
—  has  kng-staoding  lies  to  an  asso- 
date  of  Mafia  boss  Anthony  (TUmac) 
Aoocttmo. 

AuLCtuuu  is  the  kwgnsie  head  of 
the  New  Jeney  EKtioD  of  the  Lac- 
drsB  crime  bmily  wiio  has  been 
iovoived  in  biafo  on  Indiaa  reKrva- 
tioBs.  aad  dse^rtioe,  for  mioy  yean. 
Oo  Aug.  13,  be  was  ooavKied  in 
Ocean  Cooty  of  ncketeering,  exlor^  ' 
tkn,  ooQspsacy  and  Inarting  an  or- 
pHned-criine  bnity.  wtiBe  aa  ua- 
deitng  of  bis  was  convicted  of  mul^  ° 
*»-  ■        L 


The  consukaol  who  signed  oa  with 
die  reclusive  Ratnapoogh  dan  ia  198S 
is  Robeit  Frank  of  Miami  Lakes. 
Ha.,  who  has  beea  iorvoived  in  biogo 
hails  elsewhere  siace  tlK  1970s,  i>- 
cludiog  one  oo  aa  ladian  neaervation 
in  which  a  dvil  coun  ruled  he  com- 
milted  fraod. 

Frank  is  a  kngiiiDe  a^vyiatr  of  a 
inajor  bingo  operator,  James  L.  Wil- 
liams.  of  Boca  Ratoo,  Fla.,  who  is 
described  by  taw-enfarcemect  aulliar- 
tties  as  a  clcBe  .winriafr  of  Accetnoo 
as  well  as  of  olfaer  ondenporid  fig- 
ures, iarfadlt^g  die  now-decened  £t- 
totc  Zappi,  a  capo  in  (be  *^'h*""" 
crime  tkoatf.  WOaum  wai  conviaed 
in  a  fedetal  oouit  in  Flocida  in  1987 
of  tax  eradoo^^ecificaliy,  of  dom- 
miag.abKa  $330,000  fiiom-Kveni 
Bniwaid  Coonty  biago  opentiaBs, 
inrhirtiag  one  openied  by  Incfiaos.  He 
served  two  yean.'  '  .  "  " 


The  issue  of  poteatial  orputized- 
crime  infliMmrr  has  become  a  hot 
botlon  in  die  high-HakES  battle  over 
the  Ramapnngbs'  (kive  for  teoog- 
mtkn.  Oppaootts.  Jnrinding  casioo 
owaer  Dcoaid  Tramp  aitd  Bergen 
County's  two  tepicsentaives  in  die 
House,  Repablican  Maige  """f'n* 
and  Bemoan.  Robert  Tonice&i,  have 
raised  die  qKcter  oTotgasitsd  dime, 
while  backers  ot.  the  Ramapougbs 
have  biasaed  the  tactic  as  imftmnrtnrl 
and  IS  fear-mougej  aig* 

The  Ranapovghs'  ttanef,  Gevge 
Sdmeider  of  Fairfield's  Loiber, 
Schneider.  Nozzi,  Yidaiess  St.  Bil- 
iokas,  as  wdl  as  Ifaeir  chief.  RooaJd 
Van  IXiak.  aqs  Prank's  role  ended 
two  yean  ago.  aUawgb  bodt  say  be 
frtnams.  "a  friend  .of  Inc  tiAe"  imei^ 
esled'  ia  teniae  odr  oaiy  k  the  push 

ooMn<uB>p(«n«iS4 


80 


NEW  jEtser  LAW  joumwAi.  sgrngjBgB  i*.  l**» 


us  N.J.LJ.  lU 


Was  Mob  Behind  Tribe's  Casino? 


lot     uitm]     recofliltlon    bul    in    suh- 
9^^)u<n)  veniurcs 

rrtMd  of  tbc  Tribt 

Sart  \*ii  Punk-  "W«  )om  tli  tiea 
».tb  Bot  Fr»nk  b«c«us«  h«  Juti  no 
nut  or  mMey.  He  kft  on  ftOOd  wrmt 
and  he  U  ■  |ood  fileod.  W«  cip«ci  lo 
Kc  htm  i(  ou»  o«l  powwow  " 

«'>Mn  tob]  of  Bob  FrmAk'a  dcalmM 
w,oi  T^illiam*.  sod  th«  WiUltmi  n 
conitdetfd  by  fcdeial  pro»ecuiori  lO 
b«  I  (ooipifnc  utociale  of  Acceliuro. 
Van  Dvrh  uid.  "I  ffl  gUd  wc  TounJ 
thai  out  Take  tny  «ord  Tor  It  H«  hu 
no  (jiv<)l\tm<u  u  ill  None.  Nothing 
•I  all  Dm  BIA  (Buruu  of  Itiditn 
AlTainl  hm>  to  ftp(ro«e  til  buiinest 
dcilin|)  ai^  iKat  »ould  bto«  ui  out 
of  tht  Mter" 

frmfk,  31.  •  romwr  Eluabcth 
mident  tnd  Ort«tlm«  luUonal  »d- 
vcniimt  mwager  for  37if  Dotty 
J.^unuii  v«rp«per  ia  Eltubeih,  now 
defuiKt.  coaKrTTB  Otai  hU  offtciil  rok 
*i(h  Um  tri^  ended  in  1991  Bui  he 
loo  uyi  tfMt  he  U  hopeful  thst  ihouid 
the  ItanipougSf  glin  tecofnltion, 
K«  It  h«  hired  to  hdp  with  eithct 
pmiPS  Of  fcpoomic  development 
•  Im  y*rf  clow  ic  ih«  uib«."  oyi 
Frank.  »lding.  "K  iJtey  wtTC  |Oing  10 
an  rxnehing  iit  N<w  Jeri«y.  Id  Ilk* 
in  cotrc  Mck  home  wmI  help." 

Frank,  Uibe  »oon»ey  SchMidcr. 
chtcf  Van  [>unk  and  the  liibe'a 
V^tkhiigion.  DC.  Votjbylu.  Albert 
Caultoo.  •>!  d«CT)&a  Prank'a  curreoi 
ktarwi  as  acnront  wahtof  In  the 
<«.in|i   ihould  the  cUn   receive   Uibtl 

OtVf ! ,    pantcoUrty    law    enfoice- 
mcni  c-ffielali.  char3Ci«rirt  Frank  ai  a 
ftstit    fct    Williima    and    Wimims'    | 
Mafia   •'(fociaict     And   Wlltianu.   uy     1 
If^era'.  f  ro»«cutt>r».  has  been  Involved 
in  bingo  iinc«  ht  mn  an  Akfcn  bingo    j 
hoil  in   1973  fw  JoKph  Merle,  de- 
^Lrribed    by    iuthoT.lici    u    an    OhIO 
hinjrt  kn|  convicted  in   1979  of  con- 
duciini    an    ill«t«!    bwjo    operation, 
gfarMJ  Ui-tft  and  gatnbllng. 

Ftink  I  invoWetnent  with  Williams 
f;nca  tack  to  1978  -vhen.  according  to 
toutl  pipert  rilei<  h)'  the  rcdctal 
Mum)  Siiike  Ftwcc  In  1911,  Frvnk 
■  paved  4  miflor  fc1«  Hi  anetnpta  b)* 
U'liiiam  anJ  Mherr  to  btit*  a  Rmida 
'.-.iie  tCMBioT  lo  p«ish  tnroufh  M))(o 
ifsi^ladc-n  favnrablt  to  them 


Ace«tlur«  a«  Blace  Man 

Frajik  ackjtowletltes  ilnling  with 
Wiiittm%.  but  layi  be  hain't  dealt 
viih  him  iltKc  late  1985. 

As  fcr  Aocemirs,  who  moved  to 
Saudt  Ftonda  in  tSe  I970l  »  avoid 
<rulfytn,t  before  Ihc  New  Jericy  Suta 
Cotnmltston  on  Itwfti^aiton.  Prank 
layl,  "1  k/w>w  Atuhooy  Yean  ago  I 
mei  hlni.  1  grew  up  in  Petersburg  (an 
F]uah«4h  Mlihborhood)  and  he  use  to 
come  O'er  to  Eltnbaih.  His  grand- 
parew»  were  friends  wUh  my  graAd- 
parenii,  but  I  nevifr  h«d  tnyOiing  to 
do  wuh  him  " 

Accatturo.  according  to  foderml  ao- 
thorttln.  becjma  invoNed  in  running 
»nd  aujifilytnt  blngo  0(>*ratipni  on 
Lftd^  rtaervmnona  and  clacv^er*. 
Accofdini  lo  a  prc-aeniCDce  aiemo 
itndum  m  WUUanu'  ut  caae,  Ac- 
ccmirr  held  tntereiu  in  at  leatt  two 
biogo    halli    ownel    by    WiHiama    in 


SovA  Florida  In  the  ewhr  t980a.  n 
well  u  In  another  Wilflama-owMd 
binjo  opcratl'Mt  In  Ailama 

A  :979  For^tM  migizliw  irtWk 
dncrib*d  Accetcuro  aa  "(be  khigpla 
of  Florida  biQ<o"  and  detailad  Wll- 
liarnj'  conncctlona  10  ACCtttUfO.  ^H- 
hams  sued  Forhis  but  »-t[hdrew  hla 
sjii  voluntarily  after  he  wbb  dcpoaed. 

In  addition,  (ha  mcfnoiandum  vay« 
that  Atcenuro  Operaiad  a  paper  com- 
pany that  ruppttcd  blngo  cvd>  to 
halla.  including  some  on  Indian  rea* 
ervaik>o>.  AccenufO  also  rrled  lo  boy 
a  riorida  pr«5s  company  rtiat  pro- 
duced blngo  lupplkJ.  with  WillUma 
helping  AccrtlufO  wHh  Iha  purchaH 
re(.oriat»ona. 


Riomo  random, 
wnilen  by  tulilant  U.S.  aaomeya  I. 
kaidalt  Gold  and  Thomas  McNuUy  to 
Mirch  1987.  seven  weeks  tfter  Wll- 
liams'  convtciton.  describe*  Accetluro 
19  lomcona  who  sklmi  proflta  from 
tingo  opcradom  Ootd  and  NicNuliy 
ictuse  Williams  of  mnfllnf  Nngo 
fames    for   charities,   boih   ret!   and 


SINQO  l»  »• 

GAMIi  Robert 

Prank,  accn  M 

rlyht  during  • 

press  coofertDC* 

wllhUM 

iUfiiapeu^  iB 

Mahwah  Sa  IMP. 

niTcr  dlKlrvrd  M 

(he  KoM  tbat  h* 

WHS  befng  BCCV9C4 

tu  CttfforrJa  of 

sUmmlttt  f^^««^ 

ftn  Ifidita>nai 

blRfo  hall.  Vnuik 

sap  Im  r«s!cT«i4 

n-om  (ha  Mofe 

minftgcmcnt  firm 

ha  h«adfd  wid 

did  ool  know 

uTUtI  csncd  b7  tbt 

law  Joumai  ib»t 

h«  wu  cUc4  for 

Uma6  and 

4fnb*z2leti*«nt  hi 

a  $534.«0f 

judnmeat  aigalost 

hira  bmI  bli 

partnara. 


Mococied,  with  moil  of  the  proflu 
gciiig.  nietally,  to  WlUtenu*  com- 
panies rather  than  the  charities. 

Wllltama.  for  huuiMsa,  wu  oocc 
shut  down  by  authorltlas  In  NashvlHe 
who  auipccird  the  proceeds  wsre  not 
gcing  to  churity  at  stawd.  AfUt  baJBg 
shut  down,  th«  «xecuilva  director  of 
tht  charity  scl  up  by  WtUi^ms.  the 
A.-nerican  Hypcrtcnsioo  AasoclMton. 
tnc  .  obtained  a  mail-order  ordtitktloii 
tr4  rented  for  a  charitablo  loUc- 
it^itions  permit  aa  a  mlnlsttf.  The 
enacuUv*  director  was  Frank  Oerillo, 
detcribed  in  coun  papcrt  ti  an  asso- 
ciate of  Accettuio  wno  wu  indicted 
with  th*  mob  bo»«  In  1980  for  fixing 
races  in  Rorlds.  Ocrillo  was  coo- 
victed  in  1981,  while  AcccAuro  wu 
found  to  b«  incompctctil  to  stand  trial 
on  medical  grounds.   Accethiro't  net 


worti  was  p«g8*^  by  du  FBI  at  soma 
$33  mlUlon  du/lnt  (he  ear<y  1980|. 

According  to  la w-on force  ment  of* 
fklllS    in    is    tai    tvaakM    case    and 

ebewhrfo,  Williams'  has  a  hk»toiY  of 
owning  and  ninivhig  businesses,  from 
blngo  pulorv  lo  swtp  olubs,  wW» 
othen  rroniteg  for  him.  And  io  at 
leaat  three  cases,  Frank  appstrs  lo  be 
frontinR  for  WUIiams. 

Id  the  first  case.  FrttA.  according 
to  New  Meitco  authofkW.  cama  to 
AtbDqtierquc  b  1981  ht  an  stttmpt  to 
open  a  high-ciikts  bingo  bushMSS  for 
William!!  According  lo  a  1982  rtpon 
Issued  by  The  Ooverrwr'i  Orga-*uxad 
Crime  Prevention  CommlMloD  titled, 
"Infittrstioa  of  Organlicd  Crime  Into 
Blngo  io  N«w  Maiico."  Fnnk  failed 
to  dlacfoae  both  his  sod  WUIiaim' 
interest  ht  the  proposed  bingo  hal). 
Frank,  according  (o  iba  rrpovt,  uiod 
the  name  of  sft  tmployte  of  his  from 
Hiakah  Hall,  s  Witgo  parlor  In  Ffor- 
kla,  a>  the  owner,  when  In  reality 
Williams  was  to  bookroU  the  potantial 
business  ss  well  n  aivxher  venture  on 
en  Indlin  reservation. 


PiMk  •cki»«4e^ei  ploying  s  rola 
bi  trying  to  an  up  the  blngo  opertKm 
(or  Williams  lo  Albuqucroue  in  1981- 
83.  and  hrtiter  acknowleogea  thai  the 
named  principals  In  the  proposed 
vcMura  worked  at  Hialeah  HaD. 
which  ha  owned.  But  be  says,  "I  was 
on  m>  way  to  Califon^la  tad  Jimmy 
asked  me  lo  atop  by  arrd  check  il  out. 
Me  valued  by  opinion,  and  he  paid 
me." 

HWe^  Hall  t«pf«eeMS  the  second 
oumcic  of  Prank  allegedly  frontiog 
for  WllUsms.  While  Frank  admits  he 
owned  Iho  boitoess,  and  white  Florida 
corpormte  reconls  llH  him.  and  not 
Wtllbme.  aa  ea  offVccr  of  tbe  busl- 
MW.  the  proaecuatvs  In  the  WUIlana 
tax  case  wrolo  hi  1917  thit  "there 
WW  elcnr  evUence  thai  (WUllams) 
wu  riming  Htalcah  Hall.  "  Williams' 


name  was  on  the  leatc,  reported  the 
proaccutora. 

Says  Frank  about  Hialeah  HsU. 
'Jimmy  Williams  bulh  k  end  I  owoe^ 
il  Th«  butidlr.!  was  leaaed  to  a 
Charity  so  I  was  fu«  ihe  landlord. " 

The  New  Msulco  report  said  that 
the  HUleah  buslocaa  wai  cited  fbr 
violallou  of  Florida's  ganring  stat* 
utei  Frank  says.  "Thai's  inw,  but  I 
Juti  owvsd  ttM  building  " 

Alleged  SUiimJiit  •!  Hnae  Profhg 

In  iM  third  cun^  ched  by  aa* 
thOfkiai,  Prsnk.  ■  1937  graduate  of 
SetOA  Halt  UnKeriity.  uraa  himself 
accused,  slong  wldi  Williams,  of 
skimming  from  an  Indian- operated 
blngo  hsl!  In  Jackson.  Cs 

The  eccusstlofi  wss  being  made  In 
early  1986,  s  f*w  momhi  sflcr  the 
Rarrjpoughi'  chief.  Van  Dunk,  wu 
Introducing  Prank  k)  Ihe  New  Jersey 
prrs«  sa  (he  tribe's  Mw  tnonsg*'"*^ 
coTuultint.  Frank's  New  Jersey  com* 
pany,  Rory  MsfMgenwrt  Corp..  had 
signed  t  oofflract  wMh  the  clan  lA 
1983  to  help  In  the  effort  to  secure 
recognliioo,  snd  ti>  subsequently  run  s 
lighstakcs  blngo  hall  for  49  percent 
cf  the  revenues;  the  Ramapoughs 
wars  to  |«  51  percinl.  The  contract 
ruaraoteed  Ihe  tribe  129  mllilo»  over 
13  ytari.  aocordlnf  to  Fraok  eod  Van 
Dunk. 

About  seven  months  sfksr  Ihot  )uly 
1983  aanouDcemem.  a  blngo  hall  bo- 
ing  operated  by  Prsnk,  Williams  and, 
according  to  foderal  proaecuton.  thTCO 
convicted  felons.  In  Jackaon  —  about 
30  mites* northeast  of  Seeiameoto  — 
wu  closed  down  after  four  month* 
when  ks  chief  flMnelai  backer  ae- 
cosed  ihe  operaton  of  skimming  rann 
than  StS.OCC  a  night  After  yea'i  of 
Utigaifon.  aa  Amador  Counhr  JudfS 
awarded  a  )udcr'>*nl  of  S5>4.o00  Dl«t 
farterer  and  sttomsys  f^es  to  CaH- 
fomfcs  dov»1op*f  Lynn  Awbry  in  Oc* 
lobcr  1991.  Though  about  half  the 
judgmem  wu  for  IndemnirVctilon, 
other  causes  of  action  bcluded  fraud 
and  cmbenkmcnt. 

Freak  and  WUHams  left  the  atito 
and  the  Ju^ment  wu  ordered  by 
default.  Federal  proeecuton  In  Rorlds 
sty,  ttiotilb.  Ihsl  the  Wllllams/Frsnk 
group,  sner  Rcurini  u\  ernployment 
oontraa  whh  the  Mi-Wuk  Indians, 
•old  90  percent  of  tbe  contraa  to 
ennther  groi^f  for  $730,000 

Franlt  'Restt**'  •>  l*mddsnl 

Ai  hi  liM  ea«e  aT  the  .v-«'  }9tzt/ 
corporation,  »ory  Managcmeai. 
Prank  wu  the  presktent  of  Arrow 
Management  Services,  Inc.,  Ki  ths 
lackson  venture  Arrow  rtpreaented 
itself  as  s  busloeu  eioen  in  running 
blngo  halls  on  reservations. 

Frank,  kowavar,  says  ha  resigned 
u  pruk9eni  of  Arrow  MsnogetncM  on 
Nov.  39.  1983,  "before  the  accusa- 
tions Started."  He  ssyi  he  was  wv- 
comfortable  "whh  the  teem  brought 
In  by  WiUiama,"  MClAcally,  (he 
three  pecplt  he  ssyi  fw  later  discov- 
ered were  convicted  Woru  f^om  New 
Buland 

He  produced  a  ietiar  fVom  the 
PloiidB  ttlomey  teprasemtng  Williams 
which  achoowledm  thai  Frank  ra> 
signed  on  Nov.  29,  I9t3,  and  thcre- 
fote  sbouM  not  have  bcee  inckided  u 
en  InKlal  plilnilff  or  •  subsequent 
cross  daf^ndsot.  Initlslly.  Frank, 
Williains  and  Arrow  h^aoageraeat 
sued  Awbry  for  Inttrfsrlng  Mm  their 
eontrsa,  and  Awbry  counlaMued. 
The  Iswyer,  Srvce  Randall  of  Fort 
Lauderdale,   eonduded   In   the   June 


81 


Uml 


nimmuum 


i 


«i    ^  Iff  155111 

il  --irhsls 

"  -     5-3,.  *ii  *  S  =  v  t 


:"£•=<»,  „a«^  St  |i      sSafiSS 


.=1 


=^^^111 


82 

Mrs.  RouKEMA.  Representatives  of  the  Ramapough  group  claim 
all  official  contact  with  Mr.  Frank  and  his  company  have  ceased 
since  1991.  However,  the  same  Ramapough  officials  recognize  him 
as  a  close  friend  of  the  group,  and  they  suggest  that  Mr.  Frank  will 
assume  an  official  capacity  with  the  group  should  the  Bureau  on 
Indian  Affairs  grant  the  Ramapoughs  Federal  acknowledgment. 

Clearly,  Mr.  Frank  and  his  associates  are  not  far  removed  from 
the  Ramapough  efforts  and  somebody  is  continuing  to  pay  large 
sums  of  money  for  a  Washington  lobbyist  to  manage  the 
Ramapoughs'  petition  that  is  currently  before  the  BIA. 

It  should  be  noted  in  fairness  that  not  all  of  the  Ramapough  peo- 
ple supported  the  contract.  For  those  who  were  in  opposition,  I 
deeply  regret  that  the  Ramapough  people  may  be  pawns  in  a  high- 
ly organized  effort  to  bring  high-stakes  gambling  to  northern  New 
Jersey. 

Many  local  officials  and  citizens  in  the  affected  areas  of  my  dis- 
trict have  contacted  my  office  in  absolute  alarm  over  their  inability 
to  take  action  against,  or  simply  manage  the  arrival  of,  high-stakes 
gambling  in  their  back  yards  not  to  mention  all  of  the  societal  ills 
that  may  accompany  it. 

Is  it  fair  to  ask  the  taxpayers  to  pay  for  increased  law  enforce- 
ment when  they  have  no  control  over  the  gaming  decisions? 

Mr.  Chairman,  I  am  sure  that  we  can  all  agree,  Federal  acknowl- 
edgment as  a  Native  American  tribe  is  a  serious  matter.  Native 
American  recognition  and  benefits  should  only  be  granted  to  people 
with  legitimate  claim  to  it  and  to  groups  who  have  a  general  inter- 
est in  preserving  their  culture  and  heritage,  not  for  the  purpose  of 
exploiting  the  Indian  Gaming  Regulatory  Act. 

Failure  to  control  the  growing  number  of  spurious  claims  to  fed- 
eral Native  American  status,  brought  about  by  the  lure  of  big 
money  from  high-stakes  gaming  following  approval  of  the  Indian 
Gaming  Regulatory  Act,  only  denigrates  the  proud  heritage  of  our 
Nation's  first  inhabitants. 

In  making  this  distinction,  I  realize  the  Indian  gaming  experi- 
ences of  an  established,  historically  recognized,  tribe,  free  from  the 
coercion  of  unsavory  interests  seeking  to  make  a  fast  dollar,  may 
differ  from  those  of  an  upstart  group  seeking  Federal  Native  Amer- 
ican status. 

However,  the  subcommittee  must  realize  that  while  tribal  sov- 
ereignty may  not  significantly  affect  citizens'  rights  on  a  large  res- 
ervation in  a  rural  area,  it  absolutely  tramples  the  rights  of  tax- 
paying  citizens  in  crowded  urban  and  suburban  areas  such  as  Ber- 
gen County,  New  Jersey. 

Whether  the  subcommittee  wishes  to  recognize  it  or  not,  Indian 
gaming  has  become  a  big  business.  The  gaming  business,  by  its 
very  nature,  attracts  speculators  and  investors  with  large  sums  of 
cash.  By  failing  to  sufficiently  regulate  Indian  gaming  and  by  ne- 
gating State  and  local  autonomy  regarding  Indian  gaming  oper- 
ations, the  Federal  Government  is  inviting  disreputable  individuals 
or  organizations  to  become  involved  in  gaming  operations. 

M^e  no  mistake,  BIA  acknowledgment  of  the  Ramapoughs  will 
result  in  Indian  gaming  in  northern  New  Jersey  and  it  will  almost 
surely  bring  organized  crime  with  it  under  these  circumstances. 


83 

I  believe  the  current  example  from  my  district  in  northern  New 
Jersey  raises  many  questions  about  the  Federal  Indian  acknowl- 
edgment process,  potential  infiltration  of  organized  crime  in  some 
Indian  gaming  operations,  the  lack  of  Federal  oversight  for  Indian 
gaming  operations,  and  the  need  for  comprehensive  reform  of  the 
Indian  Gaming  Regulatory  Act. 

Accordingly,  I  believe  Congressman  Torricelli's  legislation,  H.R. 
2287,  the  Gaming  Integrity  and  State  Law  Enforcement  Act,  de- 
serves full  and  fair  consideration  by  this  subcommittee  and  the 
House  of  Representatives.  I  am  a  co-sponsor.  But,  most  of  all,  I  be- 
lieve it  is  time  for  the  Federal  Government  to  allow  the  citizens  of 
each  State  to  reassert  control  over  the  proliferation  of  Indian  gam- 
ing operations. 

Thank  you,  Mr.  Chairman,  for  allowing  me  to  state  my  observa- 
tions here  and  to  state  the  concerns  on  behalf  of  the  citizens  of  the 
Fifth  Congressional  District  in  New  Jersey. 

[Prepared  statement  of  Mrs.  Roukema  follows:] 


84 


TESTIMONY  OF  THE 

HONORABLE  MARGE  ROUKEMA 

BEFORE  THE  HOUSE  NATURAL  RESOURCES 

SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

OCTOBER  5,  1993 

I  am  grateful  to  Chairman  Richardson  for  affording  me  this 
opportunity  to  share  my  testimony  regarding  Indian  gaming  with  the 
Subcommittee  on  Native  American  Affairs  here  today.   The  proliferation  of 
Indian  gaming  is  a  serious  national  issue,  it  is  a  serious  issue  in  New 
Jersey,  and  it  is  a  very  serious  issue  in  my  congressional  district.  New 
Jersey's  Fifth. 

Gaming,  casino  or  otherwise,  can  produce  serious  consequences  for  the 
host  community.   It  would  take  months  to  address  the  sociological, 
economic,  moral,  legal,  and  law  enforcement  problems  associated  with 
gambling.   These  issues  are  so  serious  to  the  citizens  of  New  Jersey  that 
when  casino  gaming  was  proposed  for  Atlantic  City  the  question  was 
subject  to  state -wide  referendiim,  and  amendment  of  the  state  constitution 
was  required. 

While  I  hope  the  subcommittee  will  address  each  of  the  aforementioned 
issues  in  subsequent  hearings,  I  come  before  you  today  to  discuss  a 
situation  presently  pending  in  my  congressional  district,  which  has  broad 
Indian  gaming  ramifications,  and  which  raises  some  serious  questions 
about  illicit  financing  of  some  Indian  gaming  operations. 

A  group  of  people  residing  in  parts  of  two  communities  in  my 
congressional  district  have  been  seeking  federal  recognition  as  a  federal 
Indian  tribe  for  nearly  20  years.   When  representatives  of  the  so  called, 
"Ramapough  Mountain  Indians"  first  approached  me  in  the  mid-1980s  seeking 
a  private  bill  recognizing  the  group  as  an  Indian  tribe,  I  was  skeptical 
of  the  motives  behind  their  drive  for  recognition. 

To  this  day,  the  leaders  of  the  Ramapough  community  have  maintained 
their  sole  reason  for  seeking  federal  acknowledgment  is  to  improve  their 
housing,  education,  and  social  welfare.   However,  from  my  very  first 
discussions  with  the  group  almost  ten  years  ago,  it  has  been  quite  clear 
to  me  their  sole  interest  in  federal  acknowledgment  is  to  circumvent 
local,  state,  and  federal  jurisdiction  for  the  purpose  of  establishing 
casino  gambling  in  Bergen  County.  New  Jersey. 

On  November  20,  1985,  representatives  of  the  Ramapough  people  signed 
a  15  year  contract  with  Rory  Management  Corporation  of  Elizabeth,  New 
Jersey,  to  finance  the  group's  federal  lobbying  efforts  in  return  for  a 
percentage  of  future  gaming  operation  profits.   At  the  time,  the 
President  of  Rory  Management  Corporation  was  Mr.  Robert  Frank  of  Miami, 
Florida,  who  shortly  after  signing  the  Ramapough  agreement  resigned  as 
President  of  a  similar  firm  under  allegations  of  criminal  involvement 
with  a  California  Indian  tribe's  gaming  operations. 

Subsequent  newspaper  reports  indicated  Rory  Management  Corporation 


85 


was  prepared  to  spend  several  million  dollars  in  order  to  secure  federal 
recognition,  land,  and  gaining  facilities  for  the  Ramapough  group.   Frank 
was  to  receive  49  percent  of  the  gaining  operation  profits.   The 
Rcunapoughs  were  guaranteed  $29  million  over  15  years. 

A  September  13,  1993,  article  in  the  New  Jersey  Law  Journal . 
indicates  Frank's  ties  to  organized  crime  are  well  established. 
According  to  the  Journal .  Frank  has  "long-standing"  ties  to  Mafia  boss 
Anthony  Accetturo,  head  of  the  New  Jersey  Luchese  crime  family,  who  was 
recently  convicted  by  the  state  on  charges  of  racketeering,  extortion, 
conspiracy,  and  leading  an  organized  crime  family.   Some  of  Accetturo 's 
criminal  legacy  reportedly  involved  Indian  bingo  operations.   I  will 
submit  a  copy  of  this  article  for  the  record,  and  remind  the  subcommittee 
that  none  of  these  accounts  have  been  publicly  challenged  or  refuted. 

Representatives  of  the  Ramapough  group  claim  all  official  contact 
with  Frank  and  his  company  ceased  in  1991.   However,  the  same  Ramapough 
officials  recognize  him  as  a  close  friend  of  the  group,  and  they  suggest 
that  Frank  will  assume  an  official  capacity  with  the  group  should  the 
Bureau  of  Indian  Affairs  (BIA)  grant  the  Ramapoughs  federal 
acknowledgment.   Clearly,  Frank  and  his  associates  are  not  far  removed 
from  the  Ramapough  efforts,  and  somebody  is  continuing  to  pay  large  sums 
of  money  for  a  Washington  lobbyist  to  manage  the  Ramapoughs'  petition 
before  the  BIA. 

It  should  be  noted,  not  all  of  the  Ramapough  people  supported  the 
contract  with  Frank.   For  those  in  opposition,  I  deeply  regret  that  the 
Ramapough  people  may  be  pawns  in  a  highly  organized  effort  to  bring  high 
stakes  gambling  to  northern  New  Jersey. 

Many  local  officials  and  citizens,  in  the  affected  areas  of  my 
district,  have  contacted  my  office  in  absolute  alarm  over  their  inability 
to  take  action  against,  or  simply  manage,  the  arrival  of  high  stakes 
gambling  in  their  back  yards- -not  to  mention  all  of  the  societal  ills 
which  accompany  it.   Is  it  fair  to  ask  the  taxpayers  to  pay  for  increased 
law  enforcement  when  they  have  no  control  over  Indian  gaming  decisions? 

Mr.  Chairman,  I  am  sure  we  can  all  agree  federal  acknowledgment  as  a 
Native  American  Indian  tribe  is  a  serious  matter.   Native  American 
recognition  and  benefits  should  only  be  granted  to  peoples  with 
legitimate  claim  to  it,  and  to  groups  that  have  a  genuine  interest  in 
preserving  their  culture  and  heritage- -NOT  for  the  purpose  of  exploiting 
the  Indian  Gaiming  Regulatory  Act.   Failure  to  control  the  growing  number 
of  spurious  claims  to  federal  Native  American  status,  brought  about  by 
the  lure  of  big  money  from  high  stakes  gaming  following  approval  of  the 
Indian  Gaming  Regulatory  Act,  only  denigrates  the  proud  heritage  of  our 
Nation's  first  inhabitants. 

In  making  this  distinction,  I  realize  the  Indian  gaming  experiences 
of  an  established,  historically  recognized,  Native  American  tribe,  free 
from  the  coercion  of  unsavory  interests  seeking  to  make  a  fast  dollar, 
may  differ  from  those  of  an  upstart  group  seeking  federal  Native  American 
status.   However,  the  subcommittee  must  realize  that  while  tribal 
sovereignty  may  not  significantly  affect  citizens'  rights  on  a  large 
reservation  in  a  rural  area,  it  absolutely  tramples  the  rights  of 
taxpaying  citizens  in  crowded  urban  and  suburban  areas. 


86 


Whether  the  subcommittee  wishes  to  recognize  it  or  not,  Indian  gaming 
has  become  a  big  business.   The  gsuning  industry,  by  its  very  nature, 
attracts  speculators  and  investors  with  large  sums  of  cash.   By  failing 
to  sufficiently  regulate  Indian  gaming,  and  by  negating  state  and  local 
autonomy  regarding  Indian  gaming  operations,  the  federal  government  is 
inviting  disreputable  individuals  or  organizations  to  become  involved  in 
Indian  gaming  operations.   Make  no  mistake.  BIA  acknowledgement  of  the 
Ramapoughs  will  result  in  Indian  gaming  in  northern  New  Jersey  and  it 
will,  almost  surely,  bring  organized  crime  with  it! 

I  believe  the  current  example  from  my  district  in  northern  New  Jersey 
raises  many  questions  about  the  federal  Indian  acknowledgment  process, 
potential  infiltration  of  organized  crime  in  some  Indian  gaining 
operations,  the  lack  of  federal  oversight  for  Indian  gaming  operations, 
and  the  need  for  comprehensive  reform  of  the  Indian  Gaming  Regulatory 
Act.   Accordingly,  I  believe  Representative  Robert  G.  Torricelli's 
legislation,  H.R.  2287,  the  "Gaming  Integrity  and  State  Law  Enforcement 
Act,"  deserves  full  and  fair  consideration  by  this  subcommittee  and  the 
U.S.  House  of  Representatives.   But  most  of  all,  I  believe  it  is  time  for 
the  federal  government  to  allow  the  citizens  each  state  to  reassert 
control  over  the  proliferation  of  Indian  gaming  operations. 

Thank  you,  Mr.  Chairman,  for  allowing  me  to  share  my  feelings  and  the 
concerns  of  many  citizens  in  New  Jersey's  Fifth  Congressional  District 
with  you  here  today. 


87 


MARGE  ROUKEMA 


(Tonfircss  of  the  lanittd  States 

liouse  of  HqirtstntatiDts 
IDashington,  ©£  20515-3005 


EDUCATION  AND  LABOR  COMMITTEE 


SELECT  COMMITTEE  ON  HUNGER 

October  6,  1993 

The  Honorable  Bill  Richardson 

Chairman 

Subcommittee  on  Native  American  Affairs 

1522  Longworth  House  Office  Building 

Washington,  DC   20515-6205 

Dear  Chairman  Richardson: 

During  the  Subcommittee  on  Native  American  Affairs'  October  5,  1993,  hearing  on  Indian 
gaming,  some  members  of  the  subcommittee  and  the  first  panel  disputed  my  testimony  regarding  the 
eligibility  of  the  Ramapough  Mountain  people  to  conduct  Indian  gaming  on  their  "tnist"  lands,  should 
the  group  receive  federal  acknowledgement  from  the  Secretary  of  the  Interior.    I  would  like  to  submit 
for  the  official  record  of  the  hearing  a  summary  of  the  provisions  of  Section  20  of  the  Indian  Gaming 
Regulatory  Act  (P.L.  100-497),  which  clarifies  the  concerns  I  raised  as  part  of  my  official  testimony. 

Section  20  of  the  Indian  Gaming  Regulatory  Act  (IGRA)  generally  prohibits  gaming  on  lands 
placed  in  trust  for  an  Indian  tribe  by  the  Secretaiy  of  the  Interior  following  the  date  of  enactment. 
However,  under  Subsection  (b),  the  prohibition  on  Indian  gaming  does  not  apply  when  the  lands 
taken  into  trust  by  the  Secretary  of  the  Interior  are  part  of  "the  initial  reservation  of  an  Indian 
tribe  acknowledged  by  the  Secretai^  under  the  Federal  acknowledgment  process." 

If  the  Bureau  of  Indian  Affairs  (BIA),  and  the  Secretary  of  the  Interior,  officially  acknowledge  the 
Ramapough  group,  the  lands  taken  into  trust  by  the  Secretary  would  be  the  tribe's  "initial  reservation," 
and  therefore,  gaming  would  be  permissible  under  terms  of  the  IGRA.    I  have  verified  my 
interpretation  of  this  provision  with  the  Director  of  the  BIA  Indian  Gaining  Management  office,  Hilda 
Manuel,  and  Ms.  Maureen  Murphy,  Legislative  Attorney,  for  the  CRS  American  Law  Division. 

I  realize  the  provision  of  the  IGRA  to  which  I  refer  has  never  been  tested  in  federal  court. 
Nevertheless,  I  believe  my  concerns  regarding  Indian  gaming  in  northern  New  Jersey  are  well  founded 
based  upon  Section  20  of  the  IGRA.    I  hope  the  subcommittee  will  consider  my  thoughts,  and  I  hope 
this  letter  clears  up  any  misunderstanding  regarding  my  testimony. 

I  am  looking  forward  to  working  with  you  and  the  entire  Subcommittee  on  Native  American 
Affairs  in  the  near  future. 

^incerely. 


ik 


Marge  'Roukema 
Member  of  Congress 
MSR:bb 


cc:  The  Honorable  George  Miller,  Chairman 

Members  of  the  Subcommittee  on  Native  American  Affairs 


88 

Mr.  Richardson.  I  thank  the  gentlelady. 

Before  some  of  my  colleagues  are  recognized  for  questions,  if  any, 
I  would  like  to  aclmowledge  the  presence  of  the  chairman  of  the 
fall  committee,  the  gentleman  from  California,  and  I  would  like  to 
recognize  him  for  any  opening  statement  or  to  be  the  first  to  ask 
questions  of  this  panel. 

STATEMENT  OF  HON.  GEORGE  MILLER 

Mr.  Miller.  Thank  you,  Mr.  Chairman. 

I  will  include  my  opening  statement  for  the  record  and  just  want 
to  thank  you  for  holding  these  hearings  and  for  our  colleagues  in 
the  attendance  of  these  hearings. 

I  think  it  is  terribly  important  that  we  have  the  ability  on  behalf 
of  the  public  to  sort  out  what  are  unfounded  allegations  and  what 
are  allegations  that  are  being  used  in  rather  clever  lobbying  at- 
tempts against  the  establishment  of  Indian  gaming  and  what  is,  in 
fact,  fact  with  respect  to  the  problems  of  organized  crime  or  any 
other  kind  of  criminal  activity,  organized  or  unorganized,  within 
the  Indian  gaming  industry. 

We  have  listened  as  a  committee,  and  I  think  Senator  McCain 
and  Senator  Inouye  have  listened  as  individuals  and  members  of 
a  committee,  to  this  for  20  years.  And,  interestingly  enough,  it  has 
all  been  more  a  matter  of  press  speculation  than  any  fact  at  all. 

We  have  had  numerous  hearings  on  this  issue,  and  the  fact  re- 
mains that  Indian  gaming  may  be  better  situated  than  their  com- 
petitors in  non-Indian  gaming  in  terms  of  their  historical  involve- 
ment and  their  current  problems  with  criminal  activity — again,  or- 
ganized or  unorganized. 

So  I  think  this  is  an  important  hearing.  I  think  Senator  Inouye 
has  pointed  out  that  this  is  a  difficult  tightrope.  We  have  to  recog- 
nize the  rights  of  these  Indian  sovereign  nations.  That  rubs  many 
people  the  wrong  way,  but  it  is  a  fact  of  American  history  that  that 
is  what  these  tribal  lands  are,  and  they,  in  fact,  have  certain^  rights 
under  the  laws  and  the  treaties  of  this  country,  and  it  doesn't  mat- 
ter whether  or  not  you  make  application  for  Federal  recognition 
today  or  you  made  application  50  years  ago. 

That  process  puts  you  through  the  most  rigorous  examination  of 
your  anthropological  backgrounds  and  your  cultural  heritage  and 
your  history  beyond  recognition.  In  fact,  the  argument  of  most  peo- 
ple is  that  the  process  doesn't  work  because  it  is  almost  impossible 
for  anybody  to  get  through  that  process  in  today's  world. 

So  I  think  we  have  got  to  separate  a  number  of  different  issues 
here.  Some  people  don't  like  Indian  sovereignty  at  all.  It  simply 
rubs  them  the  wrong  way  that  there  are  rights  that  are  accorded 
to  the  Indian  nations  of  this  country.  Other  people  don't  like  com- 
petition from  what  now  has  become  successful  gambling  on  Indian 
reservations.  And  other  people  just  don't  want  to  hear  about  this 
problem. 

Those  are  all  interesting  camps,  but  they  have  got  to  be  sorted 
out  in  this  process,  and  we  cannot,  because  of  the  concerns  that 
people  have  with  Indian  gaming  from  a  competitive  point  of  view 
or  from  a  chauvinistic  point  of  view,  or  from  whatever  point  of 
view,  we  cannot  then  use  that  to  trample  on  the  rights  of  these  In- 


89 

dian  nations,  and  recognizing  that  these  are  most  difficult  ques- 
tions. 

Senator  McCain's  State  has  gone  through  a  torturous  process, 
but  finally,  when  everybody  got  engaged  and  started  working  to- 
ward a  solution,  they  worked  toward  a  solution  that  has  the  agree- 
ment of  both  the  State  and  the  Indian  nations  and  the  Federal 
Government,  and  the  fact  is  that  that  is  happening  throughout  the 
country.  It  doesn't  mean  that  they  are  all  the  same,  it  doesn't  mean 
that  there  are  not  hard  cases,  because  clearly  there  are. 

As  Congresswoman  Roukema  points  out,  urban  areas  are  tougher 
than  rural  areas,  but  the  Indian  nations  and  their  treaties  and  our 
Government  didn't  ascribe  to  them  a  different  set  of  rights  because 
they  would  eventually  end  up  a  hundred  years  later  in  an  urban 
area.  But  we  have  got  to  go  through  the  process  of  sorting  that  out. 

I  come  from  a  State  that  has  never  legally  allowed  slot  machines 
in  its  State,  and  we  are  terribly  concerned  that  Indian  gaming  can 
drive  the  process  of  the  State  having  to  accept  slot  machines. 

So  everybody  has  these  concerns,  but  we  have  got  to  work  them 
out,  not  based  upon  rumor  and  innuendo  and  wild  accusations,  we 
have  got  to  work  them  out  based  upon  the  facts,  and  I  hope  that 
this  hearing  will  proceed  along  that  process,  and  I  will  wait  my 
turn  for  questioning  because  other  Members  arrived  ahead  of  me. 

Thank  you,  Mr.  Chairman. 

[Prepared  statement  of  Mr.  Miller  follows:] 


90 


8TATEKEMT  07  CHAZRMAH  QEORGB  MILLER 

OVERSIGHT  INCIAH  OAMIMa 

SUBCOMMITTEE  OM  NATIVE  AMERICAH  AP7XIRS 

OCTOBER  S,  1993 


After  much  debate,  research  and  compromise  Congress  enacted  the 
Indian  Gaming  Regulatory  Act  in  1988.  The  purpose  of  the  Act  was 
to  regulate  gaming  on  Indian  lands.  The  Act  allowed  that  Class  One 
games  which  consist  of  traditional  Indian  games  be  regulated  by  the 
tribe.  Class  Two  games  which  consist  of  bingo,  pull  tabs,  and 
lotto  would  be  regulated  by  the  tribe  in  conjunction  with  the 
Federal  Indian  Gaming  Commission.  Class  Three  games  such  as  table 
games  and  slot  machines  would  be  regulated  pursuant  to  a  compact 
between  the  tribes  and  the  states. 

Indian  gaming  is  governmental  gaming  and  as  such,  all  proceeds  are 
mandated  by  law  to  go  back  to  the  tribal  government.  On  one 
reservation  in  Minnesota  I  had  the  opportunity  to  visit  a  new 
health  care  facility,  a  child  care  center  with  24  hour  supervision 
for  children  whose  parents  have  to  work  a  midnight  shift,  a  new 
school,  and  a  new,  safe,  water  tower  -  all  constructed  with  gaming 
proceeds.  These  dollars  are  turned  immediately  into  "quality  of 
life"  opportunities  for  Indian  children  so  that  they  cem  have  some 
of  the  benifits  that  non  Indian  children  take  for  granted. 

I'm  sure  that  what  New  Jersey  and  Nevada  do  for  their  citizens  with 
the  casino  taxes  they  receive  are  very  important  to  the  residents 
of  those  states.  New  Jersey  can  be  proud  of  the  fact  that  senior 


91 


2 

citizens  pay  only  $5.00  per  prescription  with  the  aloost  7%  of 
gross  casino  proceeds  that  go  to  the  State.  Imagine  how  much  good 
New  Jersey  and  Nevada  could  do  with  100%  of  proceeds  from  gaming! 
This  is  the  case  on  Indian  reservations  where  all  the  money  serves 
to  better  the  community. 

Indian  geuning  is  incredibly  small  compared  to  privat*  for-profit 
casinos  and  lotteries.  When  put  up  against  all  foms  of  legalized 
gaming,  Indian  gaming  in  1992  is  a  mere  5%  .  That's  all  -  5t  - 
with  all  the  recent  news  articles  and  publicity  against  Indian 
gaming  you'd  think  Indian  geaing  was  <Q>out  to  topple  Las  Vegas  and 
shove  Atlantic  City  right  into  the  oce<m! 

But  that  5%  is  of  vital  importance  to  ailing  Indian  communities. 
Gaming  is  the  first  opportunity  in  ages  for  many  Indian  tribes  to 
promote  economic  development  and  raise  their  standard  of  living. 
Not  all  tribes  are  interested  in  gaming,  but  for  those  that  are  it 
can  mean  the  difference  between  their  tribal  members  living  in 
squalor  with  no  chance  of  getting  out  and  having  the  means  to 
better  feed,  house,  and  educate  their  members. 

It  is  absurd  and  quite  naive  to  think  that  an  Indian  tribe  would 
risk  all  of  this  by  engaging  in  business  practices  with  someone  of 
questionable  background.  Indian  tribes  have  a  vested  interest  in 
ensuring  that  Indiem  qaminq  is  free  from  corruption  and  that  the 
benefits  of  gaming  reach  the  tribal  members. 


92 


3 

The  hearing  this  morning  will  focus  on  lav  enforcement  issues  as 
they  affect  Indian  gaming.  To  those  who  say  that  Indian  geuning  is 
not  regulated  -  I  say  -  LOOK  AT  THE  FACTS.  Indian  gaming  is 
regulated  and  supervised  by  FIVE  authorities: 

1.  FBI  and  the  Justice  Department  have  the  responsibility  to  work 
with  the  National  Indian  Gaming  Commission  in  conducting  background 
checks  on  persons  wishing  to  enter  into  business  with  a  gaming 
tribe.  The  FBI  also  follows  all  leads  regarding  organized  crime 
figures  who  might  attempt  to  infiltrate  Indian  gaming.  Violators 
are  prosecuted  by  the  U.S.  Attorney  in  Federal  Court. 

2.  The  National  Indian  Gaming  Coonission  which  was  authorized  by 
the  Indian  Gaming  Regulatory  Act,  is  responsible  for  regulating  all 
Class  Two  games  as  well  as  conducting  background  checks  on  persons 
wishing  to  contract  with  Indian  tribes  for  Class  Two  or  Three 
gaming  activities.  Management  contracts  are  subject  to  intense 
scrutiny  by  the  Commission  prior  to  approval. 

3.  States  -  Through  Class  Three  compacts  with  Indi<m  tribes,  states 
are  free  to  exercise  as  much  or  as  little  authority  as  is  mutually 
agreed  upon. 

4.  Department  of  the  Interior  -  The  Secretary  of  the  Interior  must 
approve  ALL  gaming  compacts  between  tribes  and  states.   The  BIA 


93 


4 

maintains  a  general  trust  responsibility  to  provide  civil 
regulation  and  criminal  law  enforcement  on  reservations. 

5.  Indian  Tribes.  Tribes  are  governments  much  ii]ce  states  and  have 
the  governmental  responsibility  to  make  sure  that  the  games  are 
properly  regulated,  operated  cleanly,  and  fairly  with  the  best 
return  to  the  tribe.  Indian  tribes  take  these  governmental 
responsibilities  as  seriously  as  any  state. 

This  Committee  has  dedicated  Itself  to  finding  out  what  aspects  of 
the  Indian  Gaming  Regulatory  Act  are  working,  what  aspects  are  not 
working,  and  what  needs  to  be  adjusted.  Chairman  Richardson  has 
conducted  exhaustive  research  and  previously  held  4  oversight 
hearings  on  different  aspects  of  gaming  already  this  year.  If 
something  is  broken  and  Indian  tribes  are  vulnerable  to  unsavory 
characters  then  this  Committee  will  fix  it.  Let  me  assure  you  -  I 
will  not  sit  idly  by  and  watch  organized  crime  Infiltrate  Indian 
gaming  as  has  been  alleged  by  some.  What  this  Committee  will  NOT 
do  is  foist  gratuitous  state  jurisdiction  upon  tribes  which  have  no 
merit  just  to  say  we  did  something.  Nor  will  this  Committee  allow 
itself  to  b«  used  unquestioning  as  a  sounding  board  for  those  whose 
only  concern  is  the  fear  of  competition. 

I  look  forward  to  hearing  the  testimony  and  from  all  the  witnesses 
today  and  engaging  in  helpful  dialogue. 


94 

Mr.  Richardson.  I  thank  the  chairman. 

Do  any  of  my  colleagues  on  the  minority  side  have  any  questions 
for  this  panel? 

The  gentleman  from  Wyoming. 

Mr.  Thomas.  Just  very  briefly. 

Obviously,  there  are  two  points  of  view  about  State  regulations. 

Senators,  either  of  you,  how  do  you  deal  with  the  notion  that  if 
a  State  allows  gambling  in  their  own  State  and  has  a  regulatory 
body,  do  you  think  the  tribal  activities  are  adequately  regulated,  or 
why  shouldn't  the  same  regulations  and  controls  apply? 

Senator  INOUYE.  Under  the  Indian  Gaming  Regulatory  Act  of 
1988,  if  a  State  does  not  criminally  prohibit  gaming  activities,  then 
a  federally  recognized  tribe  living  on  trust  lands  can  enter  into  ne- 
gotiations and  discussions  with  the  State  government  with  the  aim 
of  entering  into  a  compact  to  establish  games.  A  compact,  obvi- 
ously, assumes  that  there  would  be  negotiations. 

A  State  may  not  get  everything  it  wants,  the  Indians  may  not 
get  everything  they  want,  and,  obviously,  in  a  compact,  if  I  were 
the  State  governor  or  the  attorney  general,  I  would  insist  that 
these  games  should  be  regulated  in  a  way  similar  to  that  carried 
out  in  the  State. 

As  to  the  gentlelad/s  concern  in  New  Jersey,  if  I  may  most  re- 
spectfully suggest,  the  Gaming  Act  says  that  those  lands  that  were 
in  trust  at  the  time  of  the  enactment  would  be  those  lands  that 
may  be  used  for  such  gaming  purposes. 

If  the  Indian  people  in  New  Jersey  are  still  not  recognized — and 
apparently  they  don't  have  any  reservation — then  they  would  seem 
to  be  outside  the  law. 

Secondly,  assuming  that  they  are  recognized  at  some  later  date, 
if  such  lands  are  going  to  be  placed  in  trust  for  the  purpose  of  gam- 
ing and  if  those  lands  are  located  off  the  tribe's  reservation,  the 
Secretary  must  so  approve,  with  the  concurrence  of  the  State  gov- 
ernor, and  so  it  would  seem  inconceivable  that  the  State  of  New 
Jersey,  listening  to  the  desires  of  her  constituents,  would  say, 
"Okay,  Indians,  go  ahead  and  have  gaming  in  this  district."  So  I 
think  the  law  is  rather  clear  in  this  respect. 

The  thing  that  is  very  difficult  for  most  Americans  to  appreciate 
and  understand,  I  think,  was  very  clearly  stated  by  Chairman  Mil- 
ler, and  that  is  the  concept  of  sovereignty.  There  are  many  levels 
of  sovereignty,  as  we  are  all  aware.  The  states  delegated  certain 
powers  and  authorities  to  the  Federal  Grovemment.  The  States  also 
delegated  some  authorities  to  the  counties  and  cities. 

We  have  other  sovereign  entities  in  the  United  States;  embassy 
grounds,  for  example.  And  Indians  are  sovereign,  but  in  the  area 
of  gaming,  it  depends  upon  the  arrangement  they  have  made  with 
the  State  Government  and  the  Federal  Government. 

Some  sovereign  Indian  nations  could  arrest  me  if  I  went  speeding 
through  their  jurisdiction.  Some  would  call  upon  the  State  police  to 
do  that  job.  But  the  courts  have  consistently  recognized  that  there 
is  this  sovereign  aspect  to  Indian  tribal  governments,  and  this  rec- 
ognition must  be  honored  by  the  Congress  of  the  United  States  un- 
less we  are  willing  to,  well,  amend  the  Constitution  of  the  United 
States,  repeal  all  of  the  hundreds  of  laws  that  we  have  passed  since 
our  founding,  and  I  can't  see  that  happening. 


95 

But,  as  Senator  McCain  has  pointed  out,  in  all  of  these  72  com- 
pacts, we  are  still  to  hear  from  the  FBI  that  there  exists  organized 
crime  or  criminal  elements  involved  in  such  activities.  So  I  take  the 
word  of  the  FBI,  and  I  believe  that  they  have  done  a  good  job. 

Senator  McCain.  Mr.  Chairman,  could  I  just  add  one  additional 
comment? 

Mr.  Richardson.  Sure. 

Senator  McCain.  When  we  passed  the  Indian  Gaming  Regu- 
latory Act,  the  provisions  of  the  Act  called  for  the  setting  up  an  In- 
dian Gaming  Commission,  which  is  one  of  the  later  witnesses  here 
this  morning.  That  Indian  Gaming  Commission  was  given  the  au- 
thority to  set  regulations,  enforcement,  et  cetera. 

Now,  in  all  candor.  Congressman  Thomas,  the  last  administra- 
tion was  very  slow  in  implementing  this  Act,  in  appointing  mem- 
bers of  the  commission,  and  getting  this  whole  system  up  to  speed, 
and,  because  of  that,  I  think  that  there  were  some  problems,  and 
some  problems  may  still  exist. 

But  if  you  passed  a  law  today  that  said  that  the  Indian  tribes 
who  engage  in  Indian  gaming  operations  are  now  under  State  regu- 
lation, it  would  be  24  hours,  in  my  view,  before  that  would  be 
thrown  out  in  court  because  of  the  constitutionality  of  it. 

The  State  does  not  have  the  right  to  regulate  Indian  tribes  be- 
cause of  the  sovereign  basis  of  our  recognition  of  the  Indian  tribes, 
and  I  believe  that  if  there  is  a  problem  with  the  Indian  Gaming 
Commission  in  their  enforcement  and  their  regulation,  I  would  look 
towards  beefing  them  up,  making  sure  they  are  doing  their  job, 
rather  than  taking  an  approach  which  I  think  would  be  viewed  by 
the  courts  as  unconstitutional. 

Mr.  Thomas.  Thank  you.  It  is  true,  however,  that  some  States, 
through  their  compact,  the  tribes  have  agreed  to  State  regulation. 

Mr.  Richardson.  I  thank  my  colleague. 

Let  me  remind  my  colleagues  that  we  have  five  panels  for  this 
hearing,  and  I  would  hope  that  we  could  move  ahead. 

The  gentleman  from  Hawaii. 

Mr.  Abercrombie.  Just  a  couple  of  points  I  want  to  make  certain 
that  I  understand. 

Mr.  Hughes,  on  page  3  of  your  testimony  at  the  bottom,  you 
speak  about  protecting  the  integrity  of  any  gaming  operation  and 
assuring  that  it  does  not  put  other  State-regulated  interests  at  a 
competitive  disadvantage.  You  go  on,  on  page  4,  to  talk  about  any 
gaming  operation  receiving  the  same  level  of  regulatory  scrutiny. 

Following  up  on  what  Senator  McCain  said,  wouldn't  this  simply 
be  a  question  of  the  kind  of  compact  that  was  arrived  at  between 
the  Indian  nation  and  the  regulatory  agency  under  existing  State 
law  in  whatever  State  it  was  in.  New  Jersey  or  otherwise? 

Mr.  Hughes.  Well,  that  would  be  the  case  if,  in  fact,  there  is  a 
compact  that  is  negotiated.  But  there  is  a  process,  as  you  know, 
that  if  the  State  and  Native  American  interest  cannot  reach  accom- 
modation, there  is  a  process  for  the  Commission  to  approve,  after 
a  mediation  process,  a  compact  so  it  went  into  effect. 

But  what  I  am  saying  is  that  there  is  an  overriding  public  inter- 
est in  ensuring  that  we  have  effective  regulation  and  enforcement 
in  place. 

Mr.  Abercrombie.  I  understand  that. 


96 

Mr.  Hughes.  And  that  is  an  overriding  interest. 

Mr.  Abercrombie.  I  understand  that.  But  am  I  correct  then  in 
saying  that  there  is  a  process,  which  perhaps  you  may  think  may 
be  improved  in  legislation  here — nonetheless,  there  is  a  process 
whereby,  in  the  compact  negotiation,  a  conclusion  can  be  reached 
as  to  how  the  regulations  and  the  supervision  will  take  place? 

Mr.  Hughes.  I  can  give  you  a  scenario  where  that  is  not  assured. 
For  instance,  if  in  fact  there  is  disagreement,  which  there  often  is, 
between  a  State  and  the  Indian  tribes  negotiating  the  compact  and 
the  mediator  recommends — let's  say  the  Indian  tribe  doesn't  have 
in  place  in  the  enforcement  section  the  same  type  of  enforcement 
and  regulatory  mechanisms  in  that  State  or  required  by  that  State, 
if  there  is  to  be  Indian  gaming,  you  wouldn't  have  a  guarantee  that 
we  would  have  that  kind  of  enforcement. 

Mr.  Abercrombie.  Is  it  your  suggestion  then  that  that  kind  of 
assurance  be  built  into  any  changes  in  the  law? 

Mr.  Hughes.  That  is  the  point  I  am  making.  That  is  an  over- 
riding public  concern.  In  New  Jersey,  as  I  indicated,  W3  spend  over 
$50  million  in  enforcement  and  regulation,  and  we  still  have  a  very 
difficult  time  at  times  trying  to  prevent  money  laundering  activi- 
ties, for  instance. 

Mr.  Abercrombie.  That  brings  me  to  the  point  here.  It  seems 
there  is  a  bit  of  a  straw  figure  being  beaten  on  here.  I  am  not  so 
certain  that  the  history  of  State-regulated  gambling  in  this  country 
has  been  unfettered  by  accusations  of  criminal  activity,  and  to  sud- 
denly bring  it  up  with  respect — or  to  bring  it  up  with  emphasis 
with  respect  to  Indians,  it  seems  to  me,  is  a  little  bit  condescend- 
ing, patronizing,  or  even  racist  in  its  connotation. 

So  it  seems  to  me  that  what  you  are  suggesting  here  is  a  per- 
fectly sound  and  reasonable  approach,  that  we  examine  the  exist- 
ing law  to  see  whether  or  not  we  can  make  some  changes  here  that 
will  allow  the  Indian  nations  the  same  opportunities  to  have  super- 
vision and  regulation,  which  will  assure  the  tribal  members  that 
they  are  being  protected,  just  as  any  other  individual  or  group 
should  be  able  to  feel  that  they  are  being  protected  with  respect  to 
the  attempts  of  organized  criminals  or  any  other  group  to  try  and 
subvert  the  intent  of  the  law. 

Mr.  Hughes.  Precisely,  that  is  the  point  that  I  make.  I  think 
that  the  enforcement  and  the  supervisory  regulatory  aspects  are 
deficient.  I  thought  so  in  1988  when  I  voted  against  it,  because  I 
did  not  feel  that  it  would  guarantee  that  we  would  put  in  place 
those  types  of  protections,  protections  for  the  Indian  tribes  as  well 
as  the  non-Indian  citizens  of  a  particular  State. 

Mr.  Abercrombie.  Thank  you.  I  think  your  testimony  is  very 
well  taken.  I  think  your  approach  is  good. 

Finally  then,  Mr.  Chairman,  from  what  I  see  so  far  in  looking  at 
the  rest  of  the  testimony  and  some  of  the  other  information,  it 
seems  to  me  the  principal  worry  here  is,  they  are  afraid  for  once 
the  Indians  are  going  to  be  able  to  compete.  I  thought  competition 
was  the  big  deal  here.  If  that  is  the  case,  then  it  seems  to  me  this 
is  the  Indians'  version  of  NAFTA  for  gambling.  Let  them  compete. 
If  you  are  afraid  to  compete  against  the  Indians  and  the  tribal 
nations,  that  is  your  problem,  not  the  tribes'. 
Mr.  Richardson.  The  chair  thanks  the  gentleman. 


97 

Mr.  Abercrombie.  Thank  you.  I  appreciate  the  opportunity  for 
some  editorial  comment,  Mr.  Chairman. 

Mr.  Richardson.  The  chair  recognizes  the  chairman  of  the  com- 
mittee. 

Mr.  Miller.  Thank  you. 

Hopefully,  when  this  hearing  is  done,  as  I  said,  we  will  separate 
out  a  lot  of  different  issues.  I  think  that  the  notion  is  out  there  that 
this  is  a  willy-nilly  decision:  A  group  of  Indians  get  together,  they 
get  themselves  recognized,  and  they  get  some  investors,  and  they 
have  a  casino,  and  they  are  on  their  way.  And  nothing  could  be  fur- 
ther from  the  truth.  Either  whether  they  go  through  the  Federal 
recognition  process  and  if  they  are  successful  there,  if  they  have 
not  been  recognized  to  date,  can  they  establish  a  land  base?  Can 
their  land  base,  as  Senator  Inouye  pointed  out,  be  established  for 
this  purpose?  And  whether  or  not  they  have  worked  out  an  agree- 
ment with  the  governor  and  the  Secretary  of  the  Interior,  which 
would  be  highly  unlikely  to  be  approved  if  they  did  not  agree  to 
that. 

Not  only  that,  also  what  needs  to  be  separated  out  here  is  really 
the  rather  incredible  oversight  of  Indian  gaming  that  exists  in  this 
country  today  by  virtue  of  State  compacts.  If  you  look  at  your 
neighbor  there,  Connecticut,  in  the  State  agreement  they  have 
mandatory  licensure  for  all  of  their  employees,  they  have  agreed  to 
all  the  Federal  regulatory  oversight,  they  have  mandatory  regu- 
latory oversight  during  all  hours  of  operation,  on-site  police  pres- 
ence during  all  hours  of  operation,  liquor  control  agents  on  site  in 
all  hours  of  operations,  exhaustive  State  background  checks  of  all 
casino  executives,  mandatory  yearly  audit  by  outside  auditing 
firms,  and  then  they  have  got  to  go  through  the  Federal  process, 
which  is  all  the  memorandums  of  understanding  that  I  believe  now 
exist  between  the  FBI  and  the  BIA  for  background  checks;  for  the 
Indian  commission's  approval  of  these  management  contract,  back- 
ground checks  of  all  of  the  parties  to  that;  and  it  goes  on  and  on 
and  on.  Many  of  these,  in  fact,  don't  exist  in  New  Jersey  or  Nevada 
where  gambling  is  a  much  larger  operation. 

So  I  think  we  have  got  to  calm  this  thing  down  a  bit  and  under- 
stand what  the  real  process  is  for  this  process  to  take  place  and 
how  extensively  regulated  it  is,  and  that  the  Commission  has  the 
ability  to  assess  these  operations,  and  at  any  time  it  thinks  that 
it  does  not  have  the  adequate  funding  or  oversight  to  go  through 
this,  it  has  the  ability  to  assess  this  and  to  beef  up  that  regulatory 
process. 

I  want  to  thank  my  colleagues  for  their  testimony. 

Senator  McCain.  Chairman  Miller,  could  I  make  one  additional 
comment  to  your  statement  which  I  think  is  important? 

Mr.  Miller.  Certainly,  Senator. 

Senator  McCain.  In  the  very  long  and  detailed  and  many  times 
agonizing  negotiations  that  the  chairman  and  I  have  had  with  the 
governors  and  the  attorneys  general,  the  issue  that  we  are  hung  up 
on  has  nothing  to  do  with  enforcement  of  gaming,  it  has  nothing 
to  do  with  the  problem  of  infiltration  of  organized  crime.  The  one 
remaining  problem  we  face  in  our  negotiations  with  the  governors 
is  the  issue  of  scope  of  gaming. 


98 

So  I  would  suggest,  Mr.  Chairman,  that  your  words  are  correct 
in  that  the  governors  and  the  attorneys  general  do  not  raise  this 
alarm  that  seems  to  have  been  raised  here  at  this  hearing  and  in 
other  parts  of  America. 

Mr.  Miller.  Congressman  Hughes,  just  for  a  second  here,  on 
that  point,  I  think  the  concern  of  the  governors  here,  you  and  I 
have  spent  an  incredible  number  of  hours  discussing  this  issue  and 
the  concerns  that  would  be  raised  in  your  State  and  your  region, 
because  I  think,  as  Congresswoman  Roukema  points  out,  what  hap- 
pens in  this  region  with  this  population  density  is  obviously  of 
great  concern. 

My  understanding — and  correct  me  if  I  am  wrong — is  that  New 
Jersey  has  not  really  participated  in  the  discussions  that  Senator 
Inouye  referred  to  earlier,  that  they  have  opted  out  of  those  discus- 
sions. Is  that  correct? 

Mr.  Hughes.  I  think  that  is  essentially  correct,  except  that  I 
know  that  Bob  Del  Tuso,  when  he  was  attorney  general,  I  believe, 
was  privy  to  much  of  the  discussions  that  were  taking  place.  So 
they  monitored;  i  don't  think  they  took  the  lead. 

Mr.  Miller.  If  you  might  check  on  that,  because  my  understand- 
ing is  that  their  position  is  no  Indian  gaming,  and  so  they  are  not 
part  of  this.  But  I  think  that  is  not  going  to  become  the  law  of  the 
land,  and  this  process  is  going  to  remain  in  place,  maybe  with  some 
technical  changes  and  what-have-you,  and  this  is  being  worked  on. 

It  would  seem  to  us  if  this  particular  issue  has  not  been  raised 
to  a  great  extent  in  those  discussions  and  yet  New  Jersey  feels  that 
this  is  an  important  issue.  New  Jersey,  it  seems  to  me,  should  be 
participating  in  those  discussions  so  that  they  can  weigh  in  on 
that. 

I  mean  what  we  are  trying  to  do  is  to  get  the  attorneys  general 
and  the  governors  together  to  let's  find  out  what  concerns  are  real 
and  what  concerns  aren't  or  a  misreading  or  a  misunderstanding 
of  the  laws  or  what  the  law  doesn't  address,  and  it  would  seem  to 
me  that  New  Jersey,  that  feels  it  has  so  much  at  stake,  would  do 
well  to  get  involved  in  that  process  instead  of  coming  back  at  the 
end  and  saying,  "Well,  we  don't  accept  this,"  or,  you  know,  "This 
has  got  to  be  redone."  They  should  get  into  the  front  door  here. 

Mr.  Hughes.  Well,  I  agree  with  that.  But  my  understanding — 
and  I  will  double-check  it — is  that  our  State  has  been  privy  to  the 
negotiations.  They  have  not  taken  a  lead  in  those  negotiations,  but 
they  certainly  do  have  a  vital  interest  in  these  issues,  including 
scope  of  play,  which  is  a  problem  because  of  vague  definitions  with- 
in the  Act  which  we  are  going  to  have  to  address,  in  my  judgment. 

And  the  negotiating  process,  my  State  obviously  has  to  have  a 
decided  interest  in  that.  And  in  the  regulatory  side,  obviously  they 
have  a  decided  interest,  as  I  have  indicated,  because  of  the  poten- 
tial economic  disadvantage  it  would  put  States  like  New  Jersey  if, 
in  fact,  we  don't  play  by  the  same  level  playing  field. 

Mr.  Miller.  Well,  if  you  would  check  that  out,  I  would  appre- 
ciate it. 

Mr.  Chairman,  finally,  let  me  just  say  that  I  am  told  that  in  the 
entire  history  of  the  recognition  process  only  nine  out  of  120  tribes 
that  have  sought  recognition  have  ever  been  recognized  under  rec- 
ognition process,  and,  I  think  in  the  one  that  we  just  did  legisla- 


99 

tively,  conditions  were  placed  upon  the  recognition  for  the  purposes 
of  gaming  which  I  think  limited  it  only  to  bingo,  and  that  was  by 
agreement  of  the  tribe  and  the  State  in  South  Carolina  that  that 
would  be  the  condition  of  the  recognition.  So  this  is  not  a  free  and 
open  process  by  which  you  just  show  up  with  a  casino. 

Mrs.  ROUKEMA.  Mr.  Chairman,  may  I  interject  something  here? 
There  has  been  reference,  at  least  two  or  three  references,  to  our 
particular  situation,  and  now  Mr.  Miller  has  again  referred  to  the 
recognition,  the  conditions  under  which  recognition  are  given. 

I  think  the  point  is  that  there  is  no  clarity  under  the  law  as  to 
what  can  be  permitted  once  a  tribe  achieves  recognition.  There  is 
no  reason  to  be  hiring  high-paid,  multi-million-dollar  lobbyists  in 
Washington  if  this  tribe  simply  wants  local  recognition  for  no  other 
purpose  but  to  automatically  qualify  for  casino  gambling.  Now  that 
certainly  is  the  legal  understanding,  or  legal  interpretation  that  we 
have  had  now. 

Mr.  Miller.  They  can't  get  recognition  that  way.  They  can  get 
recognition 

Mrs.  RouKEMA.  No,  I  am  not  talking  about  how  they  get  recogni- 
tion but  once  recognized 

Mr.  Miller.  That  is  right.  Once  you  are  an  Indian  nation,  you 
are  an  Indian  nation,  and  you  have  all  the  rights  and  responsibil- 
ities of  that  nation. 

Mrs.  Roukema.  Exactly,  and  they  would  then  qualify 

Mr.  Miller.  But  if  they,  in  fact,  can  provide  adl  of  the  evidence 
as  to  the  recognition 

Mrs.  Roukema.  Oh,  exactly. 

Mr.  Miller.  You  wouldn't  say  that  they  are  not  entitled  to  be 
recognized? 

Mrs.  Roukema.  No,  I  am  not  saying  that,  not  at  all.  But  I  am 
saying  with  reference  to  a  statement  that  was  made  earlier  that  no 
tribe  who  would  be  recognized  after  the  law  could  then  retro- 
actively gain  the  right  to  Indian  gambling.  There  was  a  reference 
made  here  earlier  to  that  question,  and  I  am  saying  that  this 
Ramapough  group,  if — once  recognized,  will  automatically  qualify. 

Mr.  Miller.  That  is  their  theory. 

Mrs.  Roukema.  Pardon  me? 

Mr.  Miller.  That  is  their  theory.  I  don't  know  if  that  is  factual. 
I  appreciate  what  they  are  sajdng, 

Mrs.  Roukema.  Yes. 

May  I  make  another  point,  because  I  think  it  is  not  specific  to 
the  question  of  criminal  activity,  but  it  is  specific  to  the  question 
of  under  what  circumstances  there  should  be  recognition  and  how 
you  qualify  for  gambling. 

There  is  another  situation  in  my  district  where  there  is  a  group 
that  wants  to  invite  a  Delaware  tribe  from  Oklahoma  to  relocate 
in  Sussex  County,  New  Jersey,  and  then  they  will  qualify  for  In- 
dian gambling. 

Mr.  Miller.  I  hope  their  attorneys  are  earning  a  lot  of  money, 
because  they  have  got  an  impossible  case. 

Mrs.  Roukema.  I  hope  so,  too.  But  you  can  see  how  things  have 
gotten  pretty  far  out  of  hand. 

Mr.  Abercrombie.  Mr.  Chairman. 


100 

Mr.  Richardson.  The  chair  recognizes  the  gentleman  from  Ha- 
waii for  one  minute. 

Mr.  Abercrombie.  Less  than  one  minute. 

Mr.  Chairman,  before  we  go  any  further,  I  don't  know  if  it  is  a 
point  of  order,  but  allegations  are  flying  back  and  forth  here  about 
what  the  intentions  are  of  a  group  called  the  Ramapough,  and  as 
far  as  I  can  see  on  the  witness  list  they  don't  appear  here,  and  I 
would  just  request  that  before  we  accept  as  gospel  what  the  inten- 
tions of  any  particular  individual  or  group  are,  they  at  least  be 
given  an  opportunity  to  state  for  themselves  what  their  intentions 
are  or  are  not  now. 

If  there  are  a  group  of  people,  a  community,  now  engaged  in  the 
process  of  attempting  to  achieve  tribal  status  through  the  processes 
that  we  have  established,  that  is  one  thing,  but,  from  my  point  of 
view,  I  don't  accept  the  idea  that  someone  else  can  speak  for  them 
as  to  what  their  intentions  are. 

Mr.  Richardson.  Let  me  just  state  that  the  record  will  be  open 
for  two  weeks  in  the  hearing. 

Let  me  thank  your  distinguished  witnesses  for  being  so  patient 
and  helpful.  Let  me  mention,  too,  that  all  of  you  are  welcome  to 
join  the  panel  as  we  move  ahead  in  this  hearing.  I  want  thank  the 
distinguished  witnesses. 

PANEL  CONSISTING  OF  JIM  E.  MOODY,  SECTION  CHIEF,  ORGA- 
NIZED CRIME/DRUG  OPERATIONS,  CRIMINAL  INVESTIGA- 
TIVE DIVISION,  FEDERAL  BUREAU  OF  INVESTIGATION;  LAU- 
RENCE A.  URGENSON,  ACTING  DEPUTY  ASSISTANT  ATTOR- 
NEY GENERAL,  CRIMINAL  DIVISION,  U.S.  DEPARTMENT  OF 
JUSTICE;  DAVID  B.  PALMER,  DEPUTY  ASSISTANT  COMMIS- 
SIONER FOR  CRIMINAL  INVESTIGATION,  INTERNAL  REVE- 
NUE SERVICE,  ACCOMPANIED  BY  PETER  G.  DJINIS,  DIREC- 
TOR, OFFICE  OF  FINANCIAL  MANAGEMENT,  DEPARTMENT 
OF  THE  TREASURY 

Mr.  Richardson.  Now  we  move  on  to  panel  number  two:  Mr.  Jim 
E.  Moody,  section  chief.  Organized  Crime/Drug  Operations,  from 
the  FBI;  Mr.  Laurence  Urgenson,  acting  deputy  assistant  attorney 
general.  Criminal  Division,  Department  of  Justice;  David  Palmer, 
deputy  assistant  commissioner  for  criminal  investigation,  IRS,  ac- 
companied by  Mr.  John  Monaco,  assistant  commissioner  for  exam- 
ination, IRS;  and  Mr.  Peter  Djinis,  director,  Office  of  Financial 
Management,  U.S.  Department  of  the  Treasury. 

I  would  ask  that  the  hearing  come  to  some  reasonable  order  and 
that  we  move  ahead  with  our  first  panel. 

Gentlemen,  let  me  welcome  you  to  the  subcommittee.  As  is  the 
custom,  your  full  statements  will  be  submitted  in  the  record,  and 
we  ask  that  you  summarize  your  statement.  The  little  light  will  be 
exercised.  When  you  see  the  yellow  light,  it  means  that  your  five 
minutes  are  fast  approaching.  When  you  see  the  red  light,  we  ask 
you  to  wrap  up.  So,  again,  thank  you  for  coming. 

We  will  start  first  with  Mr.  Jim  Moody. 

Let  me  also  mention  that  our  distinguished  colleague  from  New 
Jersey,  Bob  Torricelli,  has  joined  the  panel,  and  he  will  be  intro- 
ducing our  next  witness. 


101 

I  wonder  if  the  gentleman  from  New  Jersey  wished  to  say  any- 
thing at  this  time. 

Mr.  TORRICELLI.  Mr.  Chairman,  only  to  thank  you  for  holding 
these  hearings. 

As  49  governors  have  requested  and  the  President  of  the  United 
States  has  commented  upon,  there  is  a  responsibility  in  this  Con- 
gress to  deal  with  the  complexities  confronted  by  Indian  gaming. 
Your  hearing  today  is  an  important  beginning  in  that  process, 
which  I  hope  will  take  us  to  rectifying  whatever  problems  we  find 
during  the  process  of  these  discussions. 

In  any  case,  I  thank  you  for  having  these  hearings  and  for  allow- 
ing me  to  participate. 

Mr.  Richardson.  I  thank  the  gentleman. 

Mr.  Moody,  please  proceed. 

STATEMENT  OF  JIM  E.  MOODY 

Mr.  Moody.  Good  morning,  Mr.  Chairman. 

My  name  is  Jim  Moody.  I  am  the  section  chief  for  the  Organized 
Crime/Drug  Operation  Section  for  the  Federal  Bureau  of  Investiga- 
tion. As  such,  my  section  is  responsible  for  the  FBI  investigations 
of  organized  criminal  enterprises  such  as  the  American  La  Cosa 
Nostra,  Asian,  and  European  organized  crime  groups.  This  section 
is  also  responsible  for  Italian  organized  crime  groups  such  as  the 
Sicilian  Mafia  Camorra  and  'Ndrangheta. 

I  am  pleased  to  appear  here  this  morning  to  assist  you  and  to 
discuss  some  of  the  law  enforcement  issues  relative  to  the  Indian 
Gaming  Regulatory  Act. 

Organized  crime  is  in  the  business  of  making  money.  They  are 
motivated  by  greed  and  are  consistently  and  constantly  seeking 
ways  to  generate  both  legal  and  illegal  monies  from  legal  and  ille- 
gal means.  Since  the  gaming  industry  is  a  cash-intensive  industry, 
those  factors  of  cash  and  the  need  to  generate  legal  and  illegal 
money,  coupled  with  the  dynamics  of  the  industry,  makes  it  very 
attractive  for  organized  crime  to  look  at  any  t3T)e  of  gaming  activ- 
ity. 

We  have  seen  organized  crime's  involvement  in  gaming  range 
from  many  activities  associated  with  the  industry.  We  have  also 
heard  many  more  rumors  and  innuendo  than  we  have  been  able  to 
prove  over  the  years. 

Most  of  the  discussions  of  organized  crime  in  the  gaming  indus- 
try seem  to  center  on  skimming.  Now  we  define  skimming  as  the 
generation  of  illegal  income  from  a  casino  generally  by  the  owners 
or  those  managing  the  casino.  Skimming  is  completely  different 
than  embezzlement  which  generally  involves  the  employees  steal- 
ing monies  from  their  employer. 

There  have  been  cases  where  organized  crime  has  been  involved 
in  embezzlement  of  money  from  the  casinos.  There  have  also  been 
cases  where  organized  crime  has  sponsored  teams  of  cheats  that 
defraud  the  casinos.  But  we  look  at  organized  crime's  infiltration 
of  the  casino  in  skimming  as  the  most  damaging  form  of  organized 
crime.  This  occurs  when  they  are  able  to  control  the  casino. 

Skimming  has  traditionally  been  accomplished  through  the  use 
of  a  strawman.  A  strawman  is  a  person  controlled  by  organized 
crime  who  can  undergo  the  scrutiny  of  a  law  enforcement  back- 


102 

ground  check  and  obtain  a  gaming  license.  There  have  been  several 
strawman-type  cases  prosecuted  in  the  United  States  which  re- 
sulted in  convictions  of  significant  organized  crime  figures. 

The  strawman  technique  was  used  by  organized  crime  on  the 
Rincon  Indian  Reservation.  This  is  the  only  FBI  case  wherein  orga- 
nized crime  members  have  been  convicted  for  attempting  to  control 
an  Indian  gaming  establishment. 

The  FBI  has  learned  over  the  years  that  strong  regulation  of  the 
gaming  industry  and  of  its  supporting  industries  is  the  best  and 
most  effective  means  of  keeping  organized  crime  out  of  the  indus- 
try. Gaming  regulations  and  enforcement  are  important  for  protect- 
ing Indian  gaming  because  once  organized  crime  gains  control  or 
gains  a  foothold,  it  becomes  very,  very  difficult  and  extremely  man- 
power intensive  to  remove  organized  crime  from  the  casino. 

As  legalized  gambling  spreads  throughout  the  United  States,  we 
expect  that  States  with  poor  regulations  and  controls  may  experi- 
ence an  organized  crime  influx.  We  look  at  the  primary  responsibil- 
ity for  the  gaming  regulation  and  enforcement  as  resting  with  the 
State  or  with  the  National  Indian  Gaming  Commission.  The  FBI 
becomes  involved  when  organized  crime  is  infiltrating  a  gaming  op- 
eration. It  is  either  ongoing  or  after  the  fact  quite  often  before  we 
may  hear  about  it. 

Now  Indian  gaming  poses  a  unique  challenge  to  the  National  In- 
dian Gaming  Commission.  The  FBI  has  investigative  responsibil- 
ities on  some  of  the  reservations  and  we  have  investigative  re- 
sources fully  committed  to  these  Indian  reservations,  as  we  have 
investigative  resources  fully  committed  to  organized  crime  inves- 
tigations. 

The  FBI,  however,  is  not  equipped  to  assume  a  regulatory  or  en- 
forcement role  in  Indian  gaming.  We  are  willing  to  provide  support 
to  law  enforcement  and  regulatory  agencies  that  will  have  respon- 
sibility for  monitoring  Indian  gaming,  and,  due  to  Federal  laws  and 
procedures,  it  is  much  easier  for  us  to  cooperate  with  regulatory 
agencies  that  do  have  law  enforcement  authorities  than  those  that 
don't.  Consequently,  we  would  recommend  that  regulatory  agencies 
have  such  law  enforcement  authority. 

We  will,  however,  continue  to  monitor  the  activities  of  organized 
crime,  and  if  we  discover  organized  crime  involvement  in  Indian 
gaming,  we  will  take  appropriate  action,  as  we  have  done  in  the 
past. 

The  gaming  industry  is  a  relatively  closed  industry.  Dishonest 
employees  will  be  quickly  identified  and  dismissed.  Honest  man- 
agement will  identify  problem  employees  long  before  law  enforce- 
ment. The  vast  majority  of  gaming  operations  are  run  as  legitimate 
legal  enterprises.  With  strict  regulation,  strong  internal  control, 
strong  enforcement,  and  constant  vigilance,  organized  crime's  infil- 
tration can  be  impeded. 

This  concludes  my  shortened  version  of  the  statement,  and  I  will 
be  happy  tb  answer  any  questions. 

[Prepared  statement  of  Mr.  Moody  follows:] 


103 

STATEMEirr  OF  JIM  £.  MOODY 

SECTION  CHIEF 

ORGANIZED  CEUME/DROG  OPERATIONS 

CRIMINAL  INVESTIGATIVE  DIVISION 

FEDERAL  BDREAU  OF  INVESTIGATION 

BEFORE  THE 

SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

COMMITTEE  ON  NATURAL  RESOURCES 

UNITED  STATES  HOUSE  OF  REPRESENTATIVES 

WASHINGTON,  D.C. 

OCTOBER  5,  1993 


104 

GOOD  MORNING,  MR.  CHAIRMAN,  SUBCOMMITTEE 
MEMBERS,  AND  STAFF.   MY  NAME  IS  JIM  MOODY  AND  I  AM  THE 
SECTION  CHIEF  OF  THE  ORGANIZED  CRIME/DRUG  OPERATIONS 
SECTION  #2  OF  THE  FEDERAL  BUREAU  OF  INVESTIGATION. 

MY  SECTION  IS  RESPONSIBLE  FOR  THE  FBI 
INVESTIGATIONS  OF  ORGANIZED  CRIMINAL  ENTERPRISES  SUCH 
AS  THE  LA  COSA  NOSTRA,  ASIAN  AND  EUROPEAN  ORGANIZED 
CRIME  GROUPS.   THE  SECTION  IS  ALSO  RESPONSIBLE  FOR 
INVESTIGATIONS  OF  ITALL\N  ORGANIZED  CRIME  GROUPS  SUCH 
AS  THE  SICILL\N  MAFIA,  'NDRANGHETA  AND  CAMORRA. 

I  AM  PLEASED  TO  APPEAR  HERE  THIS  MORNING  TO 
ASSIST  YOU  IN  YOUR  OVERSIGHT  FUNCTION  AND  TO  DISCUSS 
SOME  OF  THE  LAW  ENFORCEMENT  ISSUES  RELATIVE  TO  THE 
INDIAN  GAMING  REGULATORY  ACT. 

BEFORE  WE  CAN  SPECIFICALLY  ADDRESS  ORGANIZED 
CRIME'S  INTEREST  IN  INDIAN  GAMING,  I  THINK  IT  IS  IMPORTANT 
TO  HAVE  AN  UNDERSTANDING  OF  ORGANIZED  CRIME. 
ORGANIZED  CRIME  IS  IN  THE  BUSINESS  OF  MAKING  MONEY. 


105 

THEY  ARE  MOTIVATED  BY  GREED  AND  ARE  CONSTANTLY 
SEEKING  WAYS  TO  GENERATE  WEALTH  AND  POWER  THROUGH 
BOTH  LEGAL  AND  ILLEGAL  MEANS.   ORGANIZED  CRIME  HAS, 
AND  WILL  CONTINUE  TO  USE  VIOLENCE,  INTIMIDATION,  FEAR 
AND  CORRUPTION  TO  OBTAIN  ITS  GOALS.   THEY  CORRUPT 
INDIVIDUALS,  POLITICAL  SYSTEMS  AND  INSTITUTIONS. 

THE  GAMING  INDUSTRY  IS  A  CASH  INTENSIVE 
INDUSTRY.  THE  VAST  SUMS  OF  CASH  THAT  ARE  HANDLED  BY 
CASINOS  RIVAL  THAT  OF  SOME  BANKS.   THESE  FACTORS, 
COUPLED  WITH  ORGANIZED  CRIME'S  HISTORICAL  INVOLVEMENT 
IN  ILLEGAL  GAMBLING,  MAKE  ANY  GAMING  ACTIVITY 
ATTRACTIVE  TO  ORGANIZED  CRIME.  THEY  WILL  ATTEMPT  TO 
INFILTRATE  ANY  OPERATION  OR  INDUSTRY,  NOT  JUST  GAMING, 
THAT  THEY  BELIEVE  IS  VULNERABLE. 

HISTORICALLY,  WE  HAVE  SEEN  ORGANIZED  CRIME'S 
INVOLVEMENT  IN  GAMING  RANGE  FROM  CONTROLLING  LEGAL 
BINGO  PARLORS  AND  "LAS  VEGAS  NIGHTS"  FOR  CHARITIES,  TO 
ILLEGAL  NUMBERS  OPERATIONS  AND  INFILTRATING  MAJOR 
CASINOS  AND  THEY  ARE  ALLEGED  TO  EVEN  OWN  OFFSHORE 


106 

CASINOS.   ORGANIZED  CFxIME  HAS  ALSO  GAINED  INFLUENCE  BY 
CONTROLLING  SOME  OF  THE  ANCILLARY  SERVICE  INDUSTRIES 
AND  LABOR  UNIONS  THAT  SERVE  CASINOS. 

MOST  DISCUSSIONS  OF  ORGANIZED  CRIME 
INFILTRATION  IN  THE  GAMING  INDUSTRY  SEEM  TO  CENTER  ON 
THE  ISSUE  OF  SKIMMING.  WE  DEFINE  SKIMMING  AS 
GENERATING  ILLEGAL  INCOME  FROM  A  CASINO  BY  OWNERS,  BY 
A  CONTROL  GROUP  OF  A  CORPORATION,  BY  CASINO  MANAGERS, 
OR  BY  THE  OWNERS  ON  BEHALF  OF  HIDDEN  INTERESTS. 
SKIMMING  IS  DIFFERENT  THAN  EMBEZZLEMENT,  WHICH 
INVOLVES  EMPLOYEES  STEALING  MONEY  FROM  THEIR 
EMPLOYER,  OR  FROM  THEFT,  WHICH  IS  AN  OUTSIDE  PERSON  OR 
GROUP  STEALING  FROM  THE  CASINO  WITHOUT  THE 
KNOWLEDGE  OF  THE  MANAGEMENT.  ORGANIZED  CRIME  HAS 
USED  ALL  OF  THESE  METHODS  TO  GET  MONEY  ILLEGALLY 
FROM  CASDSIOS. 

THERE  HAVE  BEEN  CASES  WHERE  ORGANIZED  CRIME 
MEMBERS  AND  ASSOCIATES  HAVE  BEEN  INVOLVED  IN  THE 
EMBEZZLEMENT  OF  MONEY  FROM  CASINOS  BY  WORKING  IN 


107 

CONCERT  WITH  EMPLOYEES  TO  CHEAT  AT  CASINO  GAMES. 
THERE  HAVE  ALSO  BEEN  ORGANIZED  CRIME  SPONSORED 
TEAMS  OF  CHEATS  THAT  HAVE  GONE  INTO  CASINOS  TO 
DEFRAUD  THE  CASINOS  WITHOUT  THE  INVOLVEMENT  OF 
CASINO  EMPLOYEES.   STRONG  INTERNAL  CONTROLS  BY  THE 
CASINOS  AIDED  IN  THEIR  APPREHENSION. 

THE  MOST  DANGEROUS  AND  POTENTL\LLY  MOST 
DAMAGING  FORM  OF  ORGANIZED  CRIME  INFILTRATION  OF 
GAMING  OCCURS  WHEN  THEY  ARE  ABLE  TO  CONTROL  A  CASINO 
AND/OR  ITS  SUPPORTING  SERVICES.   WHOLESALE  SKIMMING 
FROM  A  CASINO  CANNOT  OCCUR  WITHOUT  MANAGEMENT 
INVOLVEMENT. 

SKIMMING  HAS  TRADITIONALLY  BEEN  ACCOMPLISHED 
THROUGH  THE  USE  OF  A  "STRAWMAN".    A  "STRAWMAN''  IS  A 
PERSON  CONTROLLED  BY  ORGANIZED  CRIME  WHO  CAN 
UNDERGO  THE  SCRUTINY  OF  A  LAW  ENFORCEMENT 
BACKGROUND  CHECK  AND  OBTAIN  A  GAMING  UCENSE. 

THERE  HAVE  BEEN  SEVERAL  "STRAWMAN "-TYPE 


108 

CASES  PROSECUTED  THROUGHOUT  THE    1970S  AND  1980S.   THESE 
CASES  HAVE  RESULTED  IN  THE  CONVICTIONS  OF  SIGNIFICANT 
ORGANIZED  CRIME  FIGURES  AND  HAVE  DEMONSTRATED  THAT 
WITHOUT  MANAGEMENT'S  SUPPORT,  LARGE  SCALE, 
SYSTEMATIC  SKIMMING  AND  MONEY  LAUNDERING  CANNOT 
OCCUR  WITHIN  A  CASINO. 

THE  "STRAWMAN"  TECHNIQUE  WAS  EVIDENT  IN  THE 
ATTEMPT  BY  THE  CHICAGO  ORGANIZED  CRIME  FAMILY  TO 
OBTAIN  A  HIDDEN  OWNERSHIP  OR  CONTROL  OF  THE  GAMING 
OPERATIONS  ON  THE  RINCON  INDIAN  RESERVATION  NEAR 
SAN  DIEGO,  CALIFORNL\.   THIS  IS  THE  ONLY  FBI  CASE  WHEREIN 
ORGANIZED  CRIME  MEMBERS  WERE  CONVICTED  FOR 
ATTEMPTING  TO  CONTROL  AN  INDL\N  GAMING 
ESTABLISHMENT.  THIS  CASE  DEMONSTRATED  THE  IMPORTANCE 
OF  INTELLIGENCE  AND  VIGILANCE  IN  THE  FIGHT  TO  KEEP 
ORGANIZED  CRIME  OUT  OF  INDL^N  GAMING. 

FROM  OUR  EXPERIENCE,  THE  FBI  HAS  LEARNED  THAT 
STRONG  REGULATION  OF  THE  GAMING  INDUSTRY,  AS  A  WHOLE, 
AND  OF  ITS  SUPPORTING  INDUSTRIES  IS  THE  BEST  AND  MOST 


109 

EFFECTIVE  MEANS  OF  KEEPING  ORGANIZED  CRIME  OUT  OF  THE 
INDUSTRY.   MUCH  CAN  BE  LEARNED  FROM  THE  GAMING 
REGULATIONS  THAT  REGULATE  THE  NEVADA  AND  NEW  JERSEY 
GAMING  INDUSTRIES.  GAMING  REGULATIONS  AND 
ENFORCEMENT,  SIMILAR  TO  WHAT  IS  IN  PLACE  IN  NEVADA  AND 
NEW  JERSEY,  ARE  IMPORTANT  FOR  PROTECTING  INDIAN 
GAMING.   ONCE  ORGANIZED  CRIME  GAINS  A  FOOTHOLD,  IT 
BECOMES  VERY  DIFFICULT  AND  EXTREMELY  MANPOWER 
ESfTENSIVE  TO  REMOVE  THEM. 

AS  LEGALIZED  GAMING  SPREADS  THROUGHOUT  THE 
UNITED  STATES,  WE  ARE  SEEING  THAT  THOSE  STATES  WITH 
STRONG  REGULATIONS  AND  ENFORCEMENT  ARE  NOT 
EXPERIENCING  AN  INFLUX  OF  ORGANIZED  CRIME  ACTIVITY. 
HOWEVER,  WE  EXPECT  THAT  STATES  WITH  POOR  REGULATIONS 
AND  CONTROLS  MAY  EXPERIENCE  SUCH  AN  INFLUX. 

PRIMARY  RESPONSIBILITY  FOR  GAMING  REGULATION 
AND  ENFORCEMENT  RESTS  WITH  THE  STATE  OR  WITH  THE 
NATIONAL  INDL\N  GAMING  COMMISSION.   THE  FBI 
TRADITIONALLY  BECOMES  INVOLVED  WHEN  ORGANIZED  CRIME 


no 

IS  ILLEGALLY  INFILTRATING  A  GAMING  OPERATION  OR  WHEN 
THE  CRIMINAL  ACTIVITY  INVOLVES  MORE  THAN  ONE  STATE.   IN 
SOME  INSTANCES  OF  ORGANIZED  CRIME  INFILTRATION,  THE  USE 
OF  FEDERAL  STATUTES,  SUCH  AS  RICO  OR  FEDERAL 
ELECTRONIC  SURVEILLANCE  STATUTES  ARE  ESSENTL\L  FOR 
SUCCESSFUL  INVESTIGATION  AND  PROSECUTION. 

INDIAN  GAMING  POSES  A  UNIQUE  CHALLENGE  TO 
THE  NATIONAL  INDIAN  GAMING  COMMISSION.   THE  FBI  HAS 
INVESTIGATIVE  RESPONSIBILITIES  ON  SOME  RESERVATIONS  AND 
HAS  TRADITIONALLY  INVESTIGATED  FEDERAL  GAMBLING 
VIOLATIONS.   IN  THESE  TIMES  OF  BUDGETARY  RESTRAINT,  THE 
INVESTIGATIVE  RESOURCES  OF  THE  FBI  ARE  FULLY 
COMMITTED  AND  THE  FBI  IS  NOT  EQUIPPED  TO  ASSUME  A 
REGULATORY  OR  ENFORCEMENT  ROLE  IN  INDL\N  GAMING. 
THE  FBI  IS  WILLING  TO  PROVIDE  SUPPORT  TO  LAW 
ENFORCEMENT  AND  REGULATORY  AGENCIES  THAT  WILL 
HAVE  THE  RESPONSIBILITY  OF  MONITORING  INDL\N  GAMING. 
DUE  TO  FEDERAL  LAWS  AND  PROCEDURES,  IT  IS  MUCH  EASIER 
FOR  US  TO  COOPERATE  WITH  REGULATORY  AGENCIES  THAT 


Ill 

HAVE  LAW  ENFORCEMENT  AUTHORITY  THAN  THOSE  THAT 
DON'T.   CONSEQUENTLY,  WE  WOULD  RECOMMEND 
THAT  REGULATORY  AGENCIES  HAVE  SUCH  AUTHORITY.   WE 
WILL,  HOWEVER,  CONTINUE  TO  MONITOR  THE  ACTIVITIES  OF 
ORGANIZED  CRIME  AND,  IF  WE  DISCOVER  ORGANIZED  CRIME 
INVOLVEMENT  IN  INDL\N  GAMING,  THE  FBI  WILL  TAKE 
APPROPRIATE  ACTION,  AS  WE  HAVE  DONE  IN  THE  PAST. 

THE  GAMING  INDUSTRY  IS  A  RELATIVELY  CLOSED 
INDUSTRY.  THE  INDIVIDUALS  THAT  MANAGE  AND  OPERATE 
CASINOS  WILL  QUICKLY  RECOGNIZE  EMBEZZLEMENT  OR  THEFT 
IN  THEIR  OPERATIONS.   DISHONEST  EMPLOYEES  WILL  BE 
QUICKLY  IDENTIFIED  AND  DISMISSED  IN  CASINOS  THAT  ARE 
SUBJECTED  TO  STRONG  REGULATION  AND  ENFORCEMENT. 
HONEST  MANAGEMENT  WILL  IDENTIFY  PROBLEM  EMPLOYEES 
LONG  BEFORE  LAW  ENFORCEMENT.  THE  VAST  MAJORITY 
OF  GAMING  OPERATIONS  ARE  RUN  AS  LEGITIMATE  LEGAL 
BUSINESSES.  THE  GAMING  INDUSTRY  IS  VERY  IMAGE 
CONSCIOUS,  PROFIT  DRIVEN,  AND  HAS  A  VESTED  INTEREST  IN 
ENSURING  THAT  THE  CRIMINAL  ELEMENT  IS  KEPT  OUT  OF  THE 


112 

INDUSTRY.   WITH  STRICT  REGULATION,  STRONG  INTERNAL 
CONTROL,  STRONG  ENFORCEMENT  AND  CONSTANT  VIGILANCE, 
ORGANIZED  CRIMES  INFILTRATION  CAN  BE  IMPEDED. 

TfflS  CONCLUDES  MY  OPENING  STATEMENT  AND  I 
WILL  BE  HAPPY  TO  ANSWER  ANY  QUESTIONS. 


113 

Mr.  Richardson.  I  thank  the  gentleman. 

The  chair  recognizes  Mr.  Laurence  Urgenson,  acting  deputy  as- 
sistant attorney  general,  Criminal  Division,  Department  of  Justice, 
and  I  would  ask  the  gentleman  from  Hawaii  to  temporarily  chair. 

STATEMENT  OF  LAURENCE  A.  URGENSON 

Mr.  Urgenson.  Mr.  Chairman,  members  of  the  subcommittee, 
good  morning.  My  name  is  Larry  Urgenson.  I  am  an  acting  deputy 
assistant  attorney  general  in  the  Criminal  Division  of  the  Depart- 
ment of  Justice.  I  am  happy  to  be  here  today  to  testify  concerning 
the  important  issue  of  Indian  gaming. 

As  you  well  know,  for  several  years  Congress  labored  to  develop 
legislation  that  would  accommodate  the  conflicting  interests  of  law 
enforcement  agencies,  opponents  of  Indian  gaming,  champions  of 
Tribal  sovereignty,  and  those  who  saw  gaming  as  a  solution  to  the 
enormous  economic  problems  of  the  Native  American  tribes.  The 
result  of  that  labor  was  the  enactment  of  the  Indian  Gaming  Regu- 
latory Act  in  October  1988. 

The  congressional  findings  and  policies  explicitly  set  forth  in  the 
Act  and  implicit  in  its  regulatory  scheme  are  strongly  supportive 
of  the  Native  American  tribes'  need  and  right  to  conduct  gaming 
while  recognizing  the  need  for  regulation  and  the  prevention  of  in- 
filtration by  organized  crime. 

The  Department  of  Justice  is  dedicated  to  responding  promptly 
to  serious  and  flagrant  noncompliance  with  Indian  gaming  laws. 
The  Department  will  utilize  its  enforcement  weapons  against  oper- 
ations conducted  without  tribal  sanctions  or  where  there  is  evi- 
dence of  organized  crime  infiltration,  skimming,  or  other  forms  of 
crime. 

Although  we  have  successfully  prosecuted  certain  instances  of 
criminal  activity  in  connection  with  gaming  on  Indian  lands,  I  em- 
phasize that  the  belief  held  by  some  that  Indian  gaming  operations 
are  rife  with  serious  criminality  is  not  established  by  the  data  cur- 
rently available. 

The  Department  of  Justice  believes  that  to  date  there  has  not 
been  widespread  or  successful  effort  by  organized  crime  to  infiltrate 
Indian  gaming  operations.  For  several  years,  the  FBI  has  focused 
its  efforts  on  monitoring  these  organizations  and  their  associates  so 
that  they  will  be  apprehended  if  they  engage  in  illegal  activity  or 
attempt  to  infiltrate  legitimate  enterprises.  Because  monitoring 
these  families  is  one  of  the  FBI's  highest  priorities,  I  am  confident 
that  any  evidence  of  Federal  crime  that  may  be  developed  will  be 
fully  investigated  and  referred  to  the  United  States  Attorneys  for 
appropriate  action. 

Similarly,  there  has  been  little  evidence  of  illegal  activity  com- 
niitted  by  criminal  elements  not  associated  with  the  major  orga- 
nized crime  families.  Again,  on  those  occasions  when  such  allega- 
tions have  been  brought  to  our  attention,  they  have  been  inves- 
tigated, and  when  sufficient  evidence  was  developed  for  conviction, 
\ve  have  not  hesitated  to  prosecute.  Two  examples  are  our  prosecu- 
tion of  a  Native  American  official  who  skimmed  the  receipts  of  a 
tribe's  bingo  hall  and  the  prosecution  of  persons  who  looted  and 
burned  a  New  York  casino.  There  are  a  handful  of  investigations 
into  allegations  of  similar  misconduct  now  being  conducted. 


114 

Finally,  there  are  instances  of  illegal  gaming  in  Indian  country. 
These  instances  include  regulatory  violations  stemming  from  gam- 
ing conducted  by  tribes  on  Indian  lands  and  gaming  that  is  con- 
ducted on  Indian  lands  but  not  by  Native  American  tribes. 

Gaming  that  is  not  operated  under  tribal  auspices  cannot  be 
legal  under  any  circumstances.  I  believe  that  all  operations  in  this 
category  have  been  shut  down. 

However,  even  certain  gaming  activity  conducted  under  tribal 
auspices  may  be  illegal.  The  Indian  Gaming  Regulatory  Act  estab- 
lished the  regulatory  framework  for  this  gaming  and  provides  dif- 
ferent requirements  for  games  separated  into  three  classes.  Class 
I,  social  gaming,  is  solely  regulated  by  the  tribes.  Class  II  gaming 
requires  administrative  approval  of  management  contracts  and 
tribal  gaming  ordinances.  The  National  Indian  Gaming  Commis- 
sion has  oversight  responsibilities  with  respect  to  the  Class  II  re- 
quirements. 

The  principal  category  of  gaming  characterized  as  illegal  consists 
of  those  games  which  arguably,  but  not  clearly,  are  Class  III  games 
and  which  are  conducted  without  a  compact  negotiated  between  the 
State  and  tribe  as  required  under  the  Gaming  Act. 

In  some  cases,  the  gaming  classification  is  in  dispute  because  of 
the  tribe's  claim  that  the  game  properly  falls  in  Class  II  and  re- 
quires no  compact. 

The  final  gaming  definitions  which  have  been  issued  by  the  Com- 
mission should  give  greater  certainty  to  the  gaming  classification. 
Nevertheless,  some  classification  issues  remain  in  dispute. 

There  are  many  possible  sources  for  confusion  and  frustration  for 
law  enforcement  when  Class  III  gaming  is  at  issue.  In  some  in- 
stances of  clear,  admitted  Class  III  gaming,  a  State  may  change  its 
law  to  permit  previously  forbidden  games,  thus  obligating  the 
States  to  enter  into  compact  negotiations  they  were  once  able  to 
refuse.  A  tribe  may  be  conducting  Class  III  gaming  without  a  com- 
pact, but  the  State  and  tribe  may  be  in  the  course  of  negotiations 
that  may  result  in  a  compact  that  allows  the  games.  A  State  may 
have  negotiated  the  inclusion  of  certain  games  in  a  compact  but 
has  declined  to  include  certain  other  games  or  has  placed  limits  on 
them.  The  prosecutor  is  then  uncertain  whether  the  tribe  will  dis- 
continue the  games  or  file  suit  under  the  Gaming  Act. 

A  tribe  may  be  conducting  gaming  without  a  compact  but  has 
filed  suit  against  the  State  because  the  compact  negotiation  process 
has  reached  an  impasse.  A  related  complication  is  that  some  States 
have  successfully  blocked  these  tribal  suits  by  invoking  the  immu- 
nities of  the  10th  and  11th  amendments. 

Under  these  circumstances,  the  United  States  Attorneys  are 
faced  with  difficult  decisions.  It  can  be  hard  to  justify  the  expendi- 
ture of  resources  for  those  alleged  violations  which  are  in  the  proc- 
ess of  resolution  and  which,  under  the  Gaming  Act,  may  eventually 
be  validated  by  actions  of  the  Commission,  the  State,  or  the  courts. 
In  sum,  the  current  record  does  not  support  the  argument  that 
there  is  widespread  infiltration  of  organized  crime  into  gaming  on 
Indian  reservations.  However,  there  is  gaming  of  disputable  legal- 
ity, some  of  which  will  eventually  come  into  compliance  with  the 
Gaming  Act  after  negotiations  between  the  tribe  and  the  State. 


115 

If  the  tribes  and  States  continue  to  negotiate  in  good  faith  under 
the  published  regulations  of  the  Commission,  there  will  be  far 
fewer  regulatory  violations.  We  will  continue  to  be  diligent  in  this 
area.  The  Department  has  repeatedly  warned  that  the  flow  of  cur- 
rency through  Indian  casinos  requires  vigilance  to  avert  illegal  ac- 
tivities such  as  embezzlement,  fraud,  money  laundering,  as  well  as 
to  protect  the  tribes'  interests.  Strict  compliance  with  the  scheme 
of  regulation  ordained  by  Congress  is  of  utmost  importance. 

Mr.  Chairman,  this  concludes  my  statement.  I  will  be  happy  to 
answer  any  questions  that  the  subcommittee  may  have. 

[Prepared  statement  of  Mr.  Urgenson  follows:] 


116 


IBtpnxtmtnt  of  Sns^titt 


STATEMENT 


OF 


LAURENCE  A.  URGENSON 

ACTING  DEPUTY  ASSIST/U^T  ATTORNEY  GENERAL 

CRIMINAL  DIVISION 

BEFORE  THE 

SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

COMMITTEE  ON  NATURAL  RESOURCES 
UNITED  STATES  HOUSE  OF  REPRESENTATIVES 

CONCERNING 

THE  OVERSIGHT  OF  THE  INDIAN  GAMING  REGULATORY  ACT 

ON 

OCTOBER  5,  1993 


117 


Mr.  Chairman  and  Members  of  the  Subcommittee  — 

Good  Morning.   My  name  is  Larry  Urgenson.   I  am  an  Acting 
Deputy  Assistant  Attorney  General  in  the  Criminal  Division  of  the 
Department  of  Justice. 

I  am  happy  to  be  here  today  to  testify  concerning  the 
important  issue  of  Indian  gaming.   As  the  agency  responsible  for 
the  enforcement  of  criminal  violations  of  federal  gambling  laws, 
and  in  particular,  the  Indian  Gaming  Regulatory  Act  (IGRA) ,  the 
Department  has  a  keen  interest  in  the  compliance  with  Indian 
gaming  laws.   As  you  well  know,  for  several  years  Congress 
labored  to  develop  legislation  that  would  accommodate  the 
conflicting  interests  of  law  enforcement  agencies, 
opponents  of  Indian  gaming,  champions  of  tribal  sovereignty  and 
those  who  saw  gaming  as  a  solution;  to  the  enormous  economic 
problems  of  the  Native  American  tribes.   The  result  of  that  labor 
was  the  enactment  of  the  Indian  Gaming  Regulatory  Act  in  October 
1988. 

The  congressional  findings  and  policies  explicitly  set  forth 
in  IGRA,  and  implicit  in  its  regulatory  scheme,  are  strongly 
supportive  of  the  Native  American  tribes  need  and  right  to 
conduct  gaming  while  recognizing  the  need  for  regulation  and 
prevention  of  the  infiltration  by  organized  crime. 


118 


2 

The  Department  of  Justice  is  dedicated  to  responding 
promptly  to  serious  and  flagrant  non-compliance  with  Indian 
gaming  laws.   The  Department  will  utilize  its  enforcement  weapons 
against  operations  conducted  without  tribal  sanctions,  or  where 
there  is  evidence  of  organized  crime  infiltration,  skimming  or 
other  forms  of  crime.   1  cite  several  recent  examples: 

*  Prosecutions  were  brought  against  private  entrepreneurs 
operating  casinos  in  violation  of  tribal,  state  and  federal  laws 
on  the  St.  Regis  Mohawk  reservation  in  the  Northern  District  of 
New  York; 

*  Casinos  operated  without  tribal  authority  were  closed 
down  in  the  District  of  Montana  and  the  Eastern  District  of 
Oklahoma ; 

*  A  casino  operation  in  the  Northern  District  of 
California  was  closed  down  when  reports  of  skimming  by  the 
manager,  allegedly  an  associate  of  organized  crime  figures,  was 
investigated; 

*  In  the  Southern  District  of  California,  an  Indian 
official  who  skimmed  from  the  tribal  gaming  establishment  he 
managed  was  convicted  of  embezzlement,  and  his  wife  was  convicted 
of  income  tax  violations;  and 

*  Several  members  of  a  New  York  tribe  who,  after  taking 
over  a  tribal  casino  from  its  authorized  operators,  divided  up 
the  take  and  then  firebombed  the  facility,  were  successfully 
prosecuted  for  those  offenses. 


119 


3 

Although  we  have  successfully  prosecuted  certain  instances 
of  criminal  activity  in  connection  with  gaining  on  Indian  lands,  I 
emphasize  that  the  belief  held  by  some  that  Indian  gaming 
operations  are  rife  with  serious  criminality  is  not  established 
by  the  data  currently  available.   That  belief  breaks  down  into 
three  assertions:  (1)  that  the  tribal  games  have  been  infiltrated 
by  organized  crime  families;  (2)  that  the  tribes  have  been 
victimized  by  criminal  elements  not  associated  with  the  major 
crime  families;  and  (3)  that  the  tribes  are  conducting  illegal 
gaming. 

The  Department  of  Justice  believes  that  to  date  there  has 
not  been  a  widespread  or  successful  effort  by  organized  crime  to 
infiltrate  Indian  gaming  operations.   For  several  years,  the  FBI 
has  focussed  its  efforts  on  monitoring  these  organizations  and 
their  associates  so  that  they  will  be  apprehended  if  they  engage 
in  illegal  activity  or  attempt  to  infiltrate  legitimate 
enterprises.   One  such  investigation  has  revealed  an  unsuccessful 
attempt  to  infiltrate  the  gaming  operation  of  the  Rincon  Band  in 
California.  This  investigation  resulted  in  the  indictment  of  ten 
men,  and  the  conviction  of  all  but  one,  on  charges  of 
racketeering,  extortion,  mail  fraud  and  wire  fraud.   Moreover, 
the  FBI  now  has  fewer  than  five  open  investigations  of  organized 
crime  family  activity  relating  to  gaming  on  Indian  lands. 
Because  monitoring  these  families  is  one  of  the  FBI's  highest 
priorities,  I  am  confident  that  any  evidence  of  federal  crime 


120 


4 
that  may  develop  will  be  fully  investigated  and  referred  to  the 
United  States  Attorneys  for  appropriate  action. 

Similarly,  there  has  been  little  evidence  of  illegal 
activity  committed  by  criminal  elements  not  associated  with  the 
major  organized  crime  families.   Again,  on  those  occasions  when 
such  allegations  have  been  brought  to  our  attention,  they  have 
been  investigated,  and  when  sufficient  evidence  is  developed  for 
conviction,  we  have  not  hesitated  to  prosecute.   Two  examples  are 
our  prosecution  of  a  Native  American  official  who  skimmed  the 
receipts  of  his  tribe's  bingo  hall  and  the  prosecution  of  persons 
who  looted  and  burned  a  New  York  casino.   There  are  a  handful  of 
investigations  into  allegations  of  similar  misconduct  now  being 
conducted . 

Finally,  there  are  instances  of  illegal  gaming  in  Indian 
country.   These  instances  include  regulatory  violations  stemming 
from  gaming  conducted  by  tribes  on  Indian  lands  and  gaming  that 
is  conducted  on  Indian  lands,  but  not  by  Native  American  tribes. 
Gaming  that  is  not  operated  under  tribal  auspices,  such  as  the 
casinos  on  Crow  and  Choctaw  lands,  cannot  be  legal  under  any 
circumstances.   I  believe  that  all  operations  in  this  category 
have  been  shut  down. 

However,  even  certain  gaming  activity  conducted  under  tribal 
auspices  may  be  illegal.   The  Indian  Gaming  Regulatory  Act 


121 


5 
established  the  regulatory  framework  for  this  gaming,  and 
provides  different  requirements  for  games  separated  into  three 
classes.   Classes  I  (social)  gaming  is  solely  regulated  by  the 
tribes.   Class  II  gaming  requires  administrative  approval  of 
management  contracts  and  tribal  gaming  ordinances.   The  National 
Indian  Gaming  Commission  (the  Commission)  has  oversight 
responsibilities  with  respect  to  the  Class  II  requirements. 

The  principal  category  of  gaming  characterized  as  illegal 
consists  of  those  games  which  arguably,  but  not  clearly,  are 
class  III  games,  and  which  are  conducted  without  a  compact 
negotiated  between  the  state  and  tribe,  as  required  by  IGRA.   In 
some  cases,  the  gaming  classification  is  in  dispute  because  the 
tribes  claim  that  the  game  properly  falls  in  class  II  and 
requires  no  compact.   The  final  gaming  definitions,  which  have 
been  issued  by  the  Commission,  should  give  greater  certainty  to 
gaming  classification.   Nevertheless,  some  classification  issues 
remain  in  dispute,  although  both  district  and  appellate  courts 
have  approved  both  specific  definitions  and  the  Commission's 
interpretive  approach  to  IGKA  provisions. 

There  are  many  possible  sources  of  confusion  and  frustration 
for  law  enforcement  when  class  III  gaming  is  at  issue: 

*    In  some  instances  of  clear,  admitted  class  III  gaming, 
a  state  may  change  its  law  to  permit  previously  forbidden  games. 


122 


6 
thus  obligating  the  states  to  enter  into  compact  negotiations 
they  were  once  able  to  refuse. 

*  A  tribe  may  be  conducting  class  III  gaming  without  a 
compact,  but  the  state  and  tribe  may  be  in  the  course  of 
negotiations  that  may  result  in  a  compact  that  allows  the  games. 

*  A  state  has  negotiated  the  inclusion  of  certain  games 
in  a  compact,  but  has  declined  to  include  certain  others,  or  has 
placed  limits  upon  them.   The  prosecutor  is  then  uncertain 
whether  the  tribe  will  discontinue  the  games,  or  file  suit  under 
IGRA. 

*  A  tribe  may  be  conducting  gaming  without  a  compact,  but 
has  filed  suit  against  the  state  because  the  compact  negotiation 
process  has  reached  an  impasse.   A  related  complication  is  that 
some  states  have  successfully  blocked  these  tribal  suits  by 
invoking  the  immunities  of  the  10th  and  11th  Amendments. 

Under  these  circumstances,  United  States  Attorneys  are  faced 
with  the  difficult  decision  of  whether  to  allocate  scarce 
investigative  and  prosecutorial  resources.   It  can  be  hard  to 
justify  the  expenditure  of  resources  for  these  alleged  violations 
which  are  in  the  process  of  resolution  and  which,  under  IGRA,  may 
eventually  be  validated  by  actions  of  the  Commission,  the  state 
or  the  courts. 

Let  me  give  you  a  few  examples  of  these  predicaments: 


123 


7 

*  After  encouraging  the  United  States  Attorney  to 
announce  that  she  would  not  tolerate  illegal  gambling  devices  on 
Montana  reservations  when  there  was  no  compact,  the  state 
Attorney  General  appealed  to  his  congressional  delegation  to  have 
the  Congress  grant  a  special  six  month  immunity  to  violators  in 
that  state. 

*  In  Oklahoma,  shortly  after  the  state  Attorney  General 
filed  a  brief  in  federal  court  demonstrating  the  illegality  of 
slot  machines,  the  Governor  negotiated  a  compact  for  their 
introduction  on  to  tribal  lands.   When  the  tribe  later  sought  to 
enjoin  the  United  States  Attorney  for  the  Western  District  from 
interfering  with  their  devices,  the  federal  court  held,  in  accord 
with  the  views  of  both  the  Attorney  General  and  the  United  States 
Attorney,  that  the  devices  were  illegal  under  Oklahoma  law  and 
were  not  the  proper  subject  of  negotiation.   The  Court  of  Appeals 
for  the  Tenth  Circuit  affirmed. 

*  In  Arizona,  after  state  officials  made  clear  that  they 
would  not  negotiate  with  respect  to  slot  machines,  the  United 
States  Attorney,  through  repeated  warnings,  effected  the  closure 
of  seven  casinos.   Two  closed  after  her  final  warning  and  the 
others  were  shut  down  by  seizure  of  their  machines.   One 
reservation  resisted  the  seizure  and,  during  the  ensuing  stand- 
off, the  Governor  intervened  as  mediator. 


124 


8 

The  Arizona  Governor  entered  into  compacts  with  four  of  the 
tribes.  When  three  of  the  tribes  each  made  what  he  considered 
imreasonable  demands  for  2500  machines,  he  broke  off  negotiations 
and  was  sued.  The  court  denied  the  immunity  claims  and  sent  the 
matter  to  a  mediator  who  selected  the  compacts  proposed  by  the 
tribes.   In  response,  a  special  session  of  the  legislature  was 
called  to  enact  legislation  that  declared  all  gaming  illegal 
except  for  the  state-run  lottery  and  parimutuel  horse  and  dog 
racing.   (The  question  will  soon  be  the  subject  of  a  state 
referendum. ) 

Finally,  the  sensitive  relationship  between  the  tribes  and 
the  United  States  Attorneys  also  inhibits  precipitous  action. 
The  federal  government  has  a  trust  obligation  to  encourage  tribal 
self-government  and  economy.  Congress  has  endorsed  gjuning  as  a 
legitimate  measure  for  raising  revenue,  and  the  United  States 
Attorneys  are  in  constant  collaboration  on  other  governmental 
matters  with  the  tribal  officials  who  are  also  involved  in  the 
gaming  disputes.  Given  the  uncertainty  that  exists  over  whether 
or  not  tribes  may  engage  in  particular  forms  of  gaming,  the  risk 
of  violence  attendant  upon  enforcement  of  regulatory  provisions, 
and  the  nature  of  federal-tribal  relations,  the  caution  federal 
prosecutors  are  exercising  in  moving  against  the  tribes  is 
understandable  and  appropriate. 


125 


9 

In  sum,  the  current  record  does  not  support  the  argument 
that  there  is  widespread  infiltration  of  organized  crime  into 
gaming  on  Indian  reservations.  However,  there  is  gaming  of 
disputable  legality,  some  of  which  eventually  comes  into 
compliance  with  IGRA,  after  negotiations  between  the  tribe  and 
state.   If  the  tribes  and  states  continue  to  negotiate  in  good 
faith  under  the  published  regulations  of  the  Commission,  there 
will  be  far  fewer  regulatory  violations. 

We  will  continue  to  be  diligent  in  this  area.   The 
Department  of  Justice  has  repeatedly  warned  that  the  flow  of 
currency  through  Indian  casinos  requires  vigilance  to  avert 
illegal  activities  such  as  embezzlement,  fraud  and  money 
laundering,  as  well  as  to  protect  the  tribes'  interests.   This 
observation  is  true  of  non-Indian  gaming  as  well.   Strict 
compliance  with  the  scheme  of  regulation  ordained  by  Congress  is 
of  utmost  importance  to  insure  the  benefits  of  lawful  gaming  by 
the  Indian  tribes. 

Mr.  Chairman,  this  concludes  my  statement.   I  will  be  glad 
to  answer  any  questions  from  you  and  other  members  of  the 
Subcommittee . 


84-760  O  -  Q4  -  R 


126 

Mr.  Richardson.  Thank  you. 

The  chair  recognizes  Mr.  David  Palmer. 

STATEMENT  OF  DAVID  B.  PALMER 

Mr.  Palmer.  Thank  you  very  much,  Mr.  Chairman,  good  morn- 
ing, and  members  of  the  subcommittee. 

I  am  David  Palmer,  the  deputy  assistant  commissioner  for  the 
Criminal  Investigation  Division  of  the  Internal  Revenue  Service. 
With  me  today  is  Mr.  Peter  Djinis,  director  of  the  Office  of  Finan- 
cial Enforcement,  Department  of  the  Treasury.  The  Office  of  Finan- 
cial Enforcement  is  the  office  responsible  for  the  Bank  Secrecy  Act 
compliance  and  enforcement. 

We  appreciate  this  opportunity  to  appear  before  you  today  to  dis- 
cuss current  IRS  activities  involving  enforcement  of  Internal  Reve- 
nue Code  Section  60501  and  the  Bank  Secrecy  Act,  also  known  as 
the  BSA,  as  they  relate  to  casinos  and  the  Indian  gaming  industry. 

The  IRS  is  strongly  committed  in  its  efforts  to  fight  money  laun- 
dering and  to  increase  compliance  with  the  currency  reporting  laws 
while  maintaining  an  overall  effective  tax  administration  program. 
Because  of  the  efforts  of  law  enforcement  and  regulatory  compli- 
ance functions,  money  laundering  techniques  are  constantly  chang- 
ing. Where  once  we  concentrated  our  efforts  on  the  deposit  of  large 
sums  of  cash  into  banks,  we  now  focus  our  efforts  towards  less  tra- 
ditional methods  of  money  laundering  such  as  the  use  of  nonbank 
financial  institutions,  including  money  transmitters,  check  cashing 
businesses,  and  casinos. 

The  Internal  Revenue  Service  has  a  dual  responsibility  in  its 
anti-money-laundering  role.  IRS,  through  its  Criminal  Investiga- 
tion Division,  has  been  delegated  authority  to  conduct  criminal  in- 
vestigations relative  to  financial  transactions  involving  money 
laundering  activity.  This  includes  the  criminal  money  laundering 
offenses  of  Title  18  and  the  currency  reporting  crimes  of  the  BSA, 
Title  31,  and  Internal  Revenue  Code  Section  60501,  Title  26. 

The  IRS  Examination  Division  is  responsible  for  ensuring  compli- 
ance with  the  reporting  and  record-keeping  provisions  of  the  BSA 
by  all  financial  institutions  under  its  jurisdiction.  These  include 
any  financial  institution  not  under  the  supervision  of  Federal  bank 
regulatory  agencies  or  the  Securities  and  Exchange  Commission — 
basically,  all  nonbank  financial  institutions,  including  casinos,  ex- 
cept those  located  in  Nevada. 

The  Examination  Division  also  is  responsible  for  ensuring  com- 
pliance with  Section  60501  which  presently  applies  to  all  trades  or 
businesses  other  than  those  subject  to  BSA,  including  Indian  gam- 
ing operations. 

A  database  of  these  required  currency  reports  is  maintained  by 
IRS  in  the  currency  and  banking  retrieval  system  at  our  Detroit 
Computing  Center.  This  database  is  used  by  IRS  for  civil  and 
criminal  law  enforcement  and  tax  administration  purposes. 

Certain  BSA  information  contained  in  the  database  is  also  dis- 
seminated to  other  Federal  and  State  agencies  for  law  enforcement 
and  regulatory  purposes. 

Non-tribal  casinos  have  been  subject  to  the  BSA  currency  report- 
ing and  record-keeping  requirements  since  1985.  Like  other  finan- 


127 

cial  institutions,  non-tribal  casinos  must  complete  a  currency  re- 
porting form,  a  Currency  Transaction  Report  for  Casinos,  or  a 
CTRC,  for  all  currency  transactions  in  excess  of  $10,000  whether 
as  a  deposit,  a  withdrawal,  an  exchange,  a  redemption  or  purchase 
of  chips,  receipts  from  a  slot  machine  payoff,  et  cetera. 

In  addition,  like  the  other  financial  institutions,  non-tribal  casi- 
nos must  maintain  specific  financial  records  for  five  years  including 
payer  rating  cards  maintained  by  the  casino  to  monitor  its  cus- 
tomers' waging,  wins,  and  losses.  The  IRS  Examination  Division 
has  been  delegated  the  authority  to  examine  these  non-tribal  casi- 
nos for  compliance  with  the  BSA  requirements. 

Pursuant  to  a  1985  memorandum  of  agreement  with  the  Depart- 
ment of  the  Treasury,  the  State  Gaming  Control  Board  assumes 
regulatory  responsibility  for  casinos  located  in  Nevada.  Nevada  ca- 
sinos file  reports  similar  to  the  CTRC's  directly  with  the  State 
Gaming  Control  Board  under  State  regulatory  requirements.  These 
reports  are  then  forwarded  to  the  IRS  for  inclusion  in  the  Detroit 
computing  center  database  along  with  the  other  CTRC's. 

Prior  to  the  BSA  application  to  casinos,  money  laundering  activi- 
ties occurred  involving  casinos  in  a  variety  of  ways,  including  the 
purchase  of  chips  with  large  amounts  of  cash  and  later  redeeming 
the  chips  for  casino  cashiers'  checks  without  any  significant  gam- 
bling. Casinos  also  have  been  utilized  to  exchange  narcotics  pro- 
ceeds in  small  denomination  bills  for  $100  bills  to  ease  smuggling 
cash  out  of  the  country. 

The  currency  reporting  and  record-keeping  features  of  the  BSA 
have  enabled  the  IRS  to  utilize  the  CTRC's  and  similar  documents 
to  successfully  identify  and  prosecute  individuals  involved  in  money 
laundering  where  casinos  were  involved. 

Pursuant  to  the  new  Treasury  Department  regulations  effective 
March  1,  1994,  each  casino  will  have  to  develop  and  implement  a 
BSA  compliance  program  reasonably  designed  to  assure  and  mon- 
itor compliance  with  the  Bank  Secrecy  Act.  These  BSA  compliance 
programs  are  similar  to  those  imposed  on  all  Federally  regulated 
banks  since  1987  which  have  proven  to  be  extremely  successful. 

Section  20(d)(1)  of  the  Indian  Gaming  Regulatory  Act  provides 
that  certain  provisions  of  the  Internal  Revenue  Code,  including  sec- 
tion 60501,  shall  apply  to  Indian  gaming  operations.  There  is  a 
technical  defect  in  the  Act  which  says  Section  60501  pertains  to 
gambling  winnings.  However,  Section  60501  applies  only  to  incom- 
ing cash  and  not  to  cash-out  or  winnings  as  indicated  by  the  Act. 

Nevertheless,  it  is  our  view  that  Indian  tribal  casinos  are  pres- 
ently subject  to  the  limited  currency  reporting  requirements  under 
Section  60501  which  pertain  to  cash  received  and  contain  no  record- 
keeping requirements.  In  comparison,  the  BSA  mandates  a  com- 
prehensive currency  reporting  and  detailed  record-keeping  system 
with  numerous  anti-money-laundering  safeguards.  Section  60501 
requires  the  reporting  of  receipts  of  cash  in  excess  of  $10,000  on 
form  8300,  which  is  the  report  of  cash  payments  over  $10,000  re- 
ceived in  a  trade  or  business. 

The  following  example  illustrates  the  distinction  between  a  non- 
tribal  casino  required  to  file  a  CTRC  as  compared  to  an  Indian  trib- 
al casino  required  to  file  form  8300. 


128 

Casino  A  is  a  nontribal  casino  subject  to  the  Bank  Secrecy  Act. 
Casino  B  is  a  tribal  casino  subject  to  Section  60501.  Gambler  Doe 
walks  into  Casino  A  and  purchases  chips  for  $15,000  in  cash.  At 
the  end  of  the  night,  Gambler  Doe  cashes  in  his  chips,  including 
winnings,  and  gets  $25,000  in  cash. 

Casino  A  is  required  to  file  a  CTRC  which  provides  identification 
information  on  Gambler  Doe  and  reports  both  of  the  transactions, 
the  cash  in  a  bond  entry,  the  $15,000,  and  the  cash  out,  a  bond  de- 
parture, the  $25,000. 

Gambler  Doe  then  enters  Casino  B  and  purchases  chips  in  ex- 
change for  $15,000  in  cash.  He  later  departs  and  cashes  in  the 
chips  for  $35,000  in  cash.  Pursuant  to  Section  60501,  Casino  B  is 
only  required  to  provide  Gambler  Doe's  identification  and  report 
only  the  first  half  of  the  transaction,  the  incoming  cash. 

Mr.  Chairman,  based  on  the  IRS  and  Treasury  involvement  with 
the  Indian  gaming  industry  to  date,  I  am  providing  the  following 
joint  IRS/Treasury  recommendation  for  the  subcommittee. 

We  recommend  a  statutory  amendment  to  both  the  Bank  Secrecy 
Act  and  the  Indian  Gaming  Regulatory  Act  to  specify  that  Indian 
gaming  operations  are  subject  to  the  Bank  Secrecy  Act  rather  than 
to  Section  60501.  The  comprehensive  nature  of  the  Bank  Secrecy 
Act  would  provide  additional  safeguards  to  the  tribes  while  provid- 
ing law  enforcement  the  paper  trail  necessary  for  effective  and  effi- 
cient financial  enforcement. 

In  addition,  the  IRS  and  Treasury  plan  to  work  jointly  with  the 
Justice  Department  to  coordinate  a  national  Indian  gaming  con- 
ference and  will  continue  the  ongoing  outreach  educational  initia- 
tives with  the  Indian  gaming  industry. 

In  conclusion,  I  would  like  to  emphasize  that  our  goal  is  to 
strengthen  the  cooperative  relationships  among  the  Federal  agen- 
cies working  with  the  Indian  gaming  industry,  and  I  thank  the 
subcommittee  for  its  interest  in  our  activities  relating  to  money 
laundering  enforcement  and  the  Indian  gaming  industry. 
We  would  be  happy  to  respond  to  any  questions,  Mr.  Chairman. 
[Prepared  statement  of  Mr.  Palmer  follows:] 


129 

Statement  of 

David  6.  Palmer 

Deputy  Assistant  Commissioner 

(Criminal  Investigation) 

Internal  Revenue  Service 

Before  the 


Subcommittee  on  Native  American  Affairs 
House  Committee  on  Natural  Resources 

Money  Laundering  Enforcement  and  the 
Indian  Gaming  Industry 


Octobers.  1993 


130 


STATEMENT  OP 

DAVID  B.  PALMER 

DEPUTY  ASSISTANT  COMMISSIONER  (CRIMINAL  INVESTIGATION) 

INTERNAL  REVENUE  SERVICE 

BEPORE  THE 

SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFPAIRS 

HOUSE  COMMITTEE  ON  NATURAL  RESOURCES 

OCTOBER  5,  1993 

Mr.  Chairman  and  Members  of  the  Subcommittee: 

With  me  today  is  Peter  G.  Djinis,  Director  of  the  Office  of 
Financial  Enforcement,  Department  of  the  Treasury.   The  Office  of 
Financial  Enforcement  is  the  office  responsible  for  Bank  Secrecy 
Act  compliance  and  enforcement.   We  appreciate  this  opportunity 
to  appear  before  you  today  to  discuss  current  IRS  activities 
involving  enforcement  of  Internal  Revenue  Code  Section  60501 
("Section  60501")  and  the  Bank  Secrecy  Act  ( "BSA" )  as  they  relate 
to  casinos  and  the  Indian  Gaming  industry. 

More  specifically,  I  hope  to  provide  you  with  a  broader 
understanding  of  what  money  laundering  is  and  how  it  can  occur  in 
a  casino  and  the  Indian  Gaming  industry;  IRS'  role  in  money 
laundering  enforcement;  and,  how  Section  60501  and  the  Bank 
Secrecy  Act  safeguard  against  money  laundering  while  assisting 
the  IRS  in  its  anti-money  laundering  enforcement  and  tax 
administration.   The  IRS  is  strongly  committed  in  its  efforts  to 
fight  money  laundering  and  to  increase  compliance  with  the 
currency  reporting  laws  while  maintaining  an  effective  overall 
tax  administration  program. 


131 


2 
I .    INTRODUCTION 

Simply  put,  money  laundering  is  any  method  used  to  conceal 
or  disguise  the  existence  and  origin  of  money  generated  from 
illicit  activity,  including  tax  evasion.   The  objective  of  those 
engaged  in  money  laundering  is  to  move  the  illicit  proceeds  into 
and  through  the  financial  system  and  then  back  into  the  economy 
in  a  form  which  appears  legitimate  —  the  source  of  which  cannot 
be  traced.   Money  laundering  is  executed  in  three  stages:   1) 
Placement,  2)  Layering,  and  3)  Integration. 

The  "Placement"  stage  is  the  initial  process  by  which 
launderers  inject  their  illicit  proceeds  into  the  financial 
system.   This  may  include  the  physical  disposal  of  large  amounts 
of  cash  into  banks,  as  we  saw  during  the  late  1970s  and  early 
1980s;  or  by  "structuring"  or  "smurfing"  cash  deposits  of  less 
than  $10,000  into  banks  and  other  financial  institutions 
including  casinos.   Many  other  methods  of  placement  exist 
including  the  smuggling  of  bulk  cash  out  of  the  United  States  for 
placement  into  the  financial  system  in  other  jurisdictions. 
Generally,  during  the  placement  stage  money  launderers  must 
utilize  bank  and  nonbank  financial  institutions  (NBFIs), 
including  casinos. 

Structuring  is  the  technique  for  depositing  cash  or 
converting  it  to  monetary  instruments  to  avoid  the  filing  of 
currency  reporting  forms.   For  example:  Person  A  has  a  total  of 


132 


3 

$18,000  in  currency  and  wants  to  deposit  it  into  a  bank  account 
without  a  currency  transaction  report  being  filed  by  the  bank 
with  the  government.   Person  A  purchases  a  cashiers  check  for 
$9,000  then  deposits  the  cashier's  check  with  the  remaining 
$9,000  in  cash  in  the  bank  account.   Under  the  BSA,  Person  A  has 
structured  his  financial  transactions  to  avoid  the  currency 
reporting  laws. 

Once  the  illicit  proceeds  are  placed  into  the  financial 
system,  they  are  easily  moved  around  to  separate  the  funds  from 
their  source  by  creating  complex  layers  of  financial 
transactions.   This  is  known  as  the  "Layering"  stage  and  often 
money  launderers  convert  the  placed  cash  into  cashiers  checks  or 
wire  transfer  funds  from  one  bank  account  to  another,  from  one 
bank  to  another,  and  from  one  country  to  another.   These  layers 
of  financial  transactions,  even  with  their  paper  trails,  make  it 
difficult  (and  sometimes  impossible  due  to  foreign  bank  secrecy 
laws)  for  law  enforcement  to  follow  and  trace  the  illicit  funds 
back  to  the  launderer  or  illicit  activities. 

The  final  stage  of  the  money  laundering  process  is 
"Integration"  where  the  launderer  moves  the  funds  back  into  the 
economy  by  creating  a  legitimate  appearance  or  explanation  of  the 
once  illicit  proceeds.   The  use  of  front  companies,  sham  loans, 
real  estate  transactions  and  gambling  winnings  are  just  a  few 
exaimples  of  the  integration  of  illicit  proceeds  into  the  economy. 


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After  the  illicit  proceeds  are  integrated  back  into  the  economy, 
the  launderers  have  successfully  completed  their  objective.   Many 
people  equate  money  laundering  solely  with  the  proceeds  of 
narcotics  trafficking.   However,  to  IRS  it  includes  income 
derived  from  any  illicit  activity,  including  white  collar  crime, 
as  well  as  unreported  income  from  an  otherwise  legitimate 
activity . 

Because  of  the  efforts  of  law  enforcement  and  regulatory 
compliance  functions,  money  laundering  techniques  are  constantly 
changing.   Where  once  we  concentrated  our  efforts  on  the  deposit 
of  large  sums  of  cash  into  banks,  we  now  focus  our  efforts  toward 
less  traditional  methods  of  money  laundering,  such  as  the  use  of 
non-bank  financial  institutions  (NBFIs)  including  casas  de 
cambio,  money  transmitters,  giros,  check  cashing  businesses, 
casinos,  and  those  that  sell  money  orders.   Further,  experience 
has  shown  that  money  launderers  have  not  stopped  at  the  use  of 
non-bank  financial  institutions;  rather,  they  have  utilized  cash 
intensive  trades  and  businesses,  and  have  resorted  to  cash 
purchases  of  material  assets  which  are  later  resold.   Because  of 
this  evolution,  we  too  must  remain  flexible  in  continually 
seeking  new  and  innovative  ways  to  address  this  ever-changing 
criminal  activity. 


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II.  IRS  JURISDICTION  PERTAINING  TO  MONEX  LAUNDERING  ENFORCEMENT. 

When  we  speak  of  "money  laundering  enforcement,"  we  actually 
are  making  reference  to  the  enforcement  of  three  separate  laws; 
The  recordkeeping  and  currency  transaction  reporting  requirements 
of  the  "Bank  Secrecy  Act"  (Title  31);  Section  60501  of  the 
Internal  Revenue  Code  (Title  26);  and,  the  money  laundering 
criminal  statutes  (Title  18).   The  Bank  Secrecy  Act  (BSA)  and  IRC 
Section  60501  provide  a  means  to  identify  and  fight  money 
laundering  through  currency  transaction  reporting  and  financial 
recordkeeping.   The  money  laundering  criminal  statutes  provide  a 
direct  means  for  the  investigation  and  prosecution  of  money 
laundering  activity.   These  three  laws  prescribe  severe  criminal 
and  civil  penalties  and  forfeiture  provisions . 

The  IRS  has  a  dual  responsibility  in  its  anti-money 
laundering  role:   IRS,  through  its  Criminal  Investigation 
Division,  has  been  delegated  authority  to  conduct  criminal 
investigations  relative  to  financial  transactions  involving  money 
laundering  activity.   This  includes  the  criminal  money  laundering 
offenses  of  Title  18;  and,  the  currency  reporting  crimes  of  the 
BSA  (Title  31)  and  IRC  Section  60501  (Title  26). 

IRS  Examination  is  responsible  for  ensuring  compliance  with 
the  reporting  and  recordkeeping  provisions  of  the  BSA  by  all 
financial  institutions  under  its  jurisdiction.   These  include  any 
financial  institution  not  under  the  supervision  of  federal  bank 


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regulatory  agencies  or  the  Securities  and  Exchange  Commission, 
i.e. ,  all  nonbank  financial  institutions  and  include  casinos 
(except  those  located  in  Nevada).   Examination  also  is 
responsible  for  ensuring  compliance  with  Section  60501,  which 
presently  applies  to  all  trades  or  businesses  other  than  those 
subject  to  the  BSA,  including  Indian  Gaming  operations. 

Bank  Secrecy  Act 

Under  the  authority  of  the  Bank  Secrecy  Act,  Congress 
established  certain  currency  information  reporting  requirements. 
These  reporting  requirements  help  us  identify  those  persons  who 
attempt  to  conceal  their  participation  in  crimes  where 
substantial  amounts  of  currency  are  involved.   The  information 
reports  provide  a  paper  trail  of  records  that  must  be  maintained 
by  financial  institutions  for  a  period  of  five  years.   Of  equal 
importance  to  the  reporting  requirements  of  the  BSA,  the  BSA  also 
contains  requirements  that  financial  institutions  maintain 
records  necessary  to  reconstruct  financial  transactions  in  the 
event  of  a  later  criminal  or  tax  case.   The  Bank  Secrecy  Act  and 
its  reporting  requirements  provide  additional  tools  to  curb  money 
laundering  indirectly  by  authorizing  criminal  prosecution  of 
those  persons  who  intentionally  fail  to  file,  or  file  false, 
currency  information  reports.   IRS  has  been  delegated  authority 
to  conduct  all  criminal  investigations  relative  to  the  BSA  with 
the  exception  of  matter  involving  cross-border  transportation  of 
currency  and  monetary  instruments  (U.S.  Customs  Service  Currency 


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and  Monetary  Instruments  Reports  -  CMIRs).   IRS'  regulatory 
responsibilities  include  ensuring  the  timely  and  accurate  filing 
of  the  following  three  Bank  Secrecy  Act  reports: 

1.  Currency  Transaction  Report  (Form  4789).   A  "Currency 
Transaction  Report"  (CTR)  must  be  filed  by  a  financial 
institution  for  each  cash  deposit,  withdrawal,  exchange,  or  other 
payment  or  transfer  involving  currency  in  excess  of  $10,000  on  a 
business  day. 

2.  Currency  Transaction  Reports  by  Casino  (Form  8362).   Any 
licensed  casino  operating  in  the  United  States  with  gross  annual 
gcuning  revenues  in  excess  of  $1  million  must  file  a  "Currency 
Transaction  Report  by  Casino"  (CTRC)  for  each  currency 
transaction  in  excess  of  $10,000  on  a  day.   A  currency 
transaction  at  a  casino  includes  both  incoming  and  outgoing  cash. 
CTRCs  are  not  currently  required  to  be  filed  by  Indian  Geuning 
operations  or  casinos  located  in  Nevada. 

3. Report  of  Foreign  Bank  and  Financial  Accounts  (Treasury 
Form  TDF  90-22.1) .   Any  person  subject  to  U.S.  jurisdiction 
(including  a  U.S.  citizen  residing  abroad)  who  has  a  financial 
interest  in  or  signature  authority  over  account (s)  with  a  value 
of  more  than  $10,000  must  file  a  Report  of  Foreign  Bank  and 
Financial  Accounts  (FBAR). 


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IRC  Section  60501 

Section  60501  of  the  Internal  Revenue  Code  provides  another 
key  tool  for  the  tax  compliance  and  law  enforcement  community  to 
use  in  its  efforts  to  detect  unreported  or  illicit  income  and 
prevent  the  laundering  of  that  income.   This  section  requires  the 
reporting  of  receipts  of  cash  in  excess  of  $10,000  by  persons 
engaged  in  any  trade  or  business  (other  than  financial 
institutions  required  to  report  under  the  BSA)  on  a  Report  of 
Cash  Payments  Over  $10.000  Received  in  a  Trade  or  Business  (IRS 
Form  83001 .   This  section  applies  to  casinos  with  gross  annual 
geiming  revenue  of  $1  million  or  less  (the  BSA  applies  to  casinos 
with  over  $1  million)  and  to  all  Indian  gaming  operations. 
Section  60501  is  referenced  in  the  Indian  Gaming  Regulatory  Act 
( hereinafter  the  Act ) . 

Similar  to  the  BSA,  Section  60501  provides  for  both  civil 
and  criminal  sanctions  for  failure  to  file  reports;  for  filing 
false  reports;  and,  for  structuring,  or  assisting  in  structuring 
financial  transactions  to  evade  tne  reporting  requirements. 
Unlike  the  BSA,  Section  60501  contains  provisions  for 
notification  to  the  effected  parties  and  for  the  inclusion  of 
certain  monetary  instruments  as  cash.   IRS  Examination  is 
responsible  for  ensuring  the  reporting  requirements  are  met  and 
IRS  Exeunination  conducts  routine  compliance  checks  of  businesses. 
IRS  Criminal  Investigation  conducts  investigations  of  alleged 
criminal  violations  of  Section  60501  which  are  prosecuted 


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criminally  under  the  provisions  of  IRC  Section  7203  (willful 
failure  to  file)  or  Section  7206  (false  or  fraudulent  statement). 

A  database  of  these  required  currency  reports  is  maintained 
by  IRS  in  the  Currency  and  Banking  Retrieval  System  (CBRS)  at  our 
Detroit  Computing  Center.   This  database  is  used  by  IRS  for  civil 
and  criminal  law  enforcement  and  tax  administration  purposes. 
Certain  information  contained  in  the  database  is  also 
disseminated  to  other  federal  and  state  agencies  for  law 
enforcement  and  regulatory  purposes. 

The  following  exeimple  illustrates  the  distinction  between  a 
casino  required  to  file  a  CTRC  as  compared  to  an  Indian  Tribal 
casino  required  to  file  Forms  8300: 

Casino  A  is  a  non-Tribal  casino  subject  to  the  BSA.   Casino 
B  is  a  tribal  casino  subject  to  Section  60501.   Gambler  Doe  walks 
into  Casino  A  and  purchases  chips  for  $15,000  in  cash.   At  the 
end  of  the  night  Geunbler  Doe  cashes  in  his  chips  including 
winnings  and  receives  $25,000  in  cash.   Casino  A  is  required  to 
file  a  CTRC  which  provides  identification  information  on  Gambler 
Doe  and  reports  both  of  the  transactions  —  cash  in  upon  entry 
and  cash  out  upon  departure.   Gambler  Doe  then  enters  Casino  B 
and  purchases  chips  in  exchange  for  $15,000  in  cash.   Geunbler  Doe 
later  departs  after  cashing  in  chips  for  $35,000  in  cash. 
Pursuant  to  Section  60501,  Casino  B  is  only  required  to  provide 


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identification  information  and  report  only  the  first  half  of  the 
transaction  —  the  incoming  cash  to  purchase  chips  upon  entry. 
This  limited  information  reporting  cuts  off  the  paper  trail 
thereby  eliminating  further  financial  analysis  of  Gambler  Doe ' s 
currency  transactions.   In  addition.  Casino  A  is  required  to 
maintain  additional  supporting  documents  concerning  Gambler  Doe  *  s 
financial  transactions  for  five  years.   Casino  B  is  not  required 
to  maintain  any  additional  documents. 

III.  VULNERABILITY  OF  CASINOS  FOR  MONEY  LAUNDERING  ACTIVITY 

In  May  of  1985,  the  Department  of  the  Treasury  amended  the 
BSA  regulations  (31  C.F.R.  Part  103)  to  designate  non-Tribal 
casinos  as  financial  institutions  subject  to  the  BSA  currency 
reporting  and  recordkeeping  requirements.   Like  other  financial 
institutions,  non-Tribal  casinos  must  complete  a  currency 
reporting  form  (CTRC)  for  all  currency  transactions  in  excess  of 
$10,000,  whether  as  a  deposit,  withdrawal,  exchange,  or 
redemption  or  purchase  of  chips,  receipts  from  slot  machine 
payoffs,  etc.   In  addition,  like  the  other  financial 
institutions,  non-Tribal  casinos  must  maintain  specific  financial 
records  for  five  years,  including  player  rating  cards  maintained 
by  the  casino  to  monitor  its  customer's  waging  wins  and  losses. 
IRS  Excunination  has  been  delegated  the  authority  to  examine  non- 
Tribal  casinos  (except  those  located  in  Nevada)  for  compliance 
with  the  BSA  requirements. 


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Also  in  1985,  the  Department  of  the  Treasury  entered  into  a 
Memorandum  of  Agreement  with  the  State  of  Nevada.   Pursuant  to 
the  agreement,  the  State  Gaming  Control  Board  assumes  regulatory 
responsibility  for  casinos  located  in  Nevada.   Nevada  casinos 
file  reports  under  state  regulatory  requirements  similar  to  the 
CTRCs  for  cash-in  transactions  directly  with  the  State  Gaming 
Control  Board.   Nevada  casinos  also  file  currency  transaction 
incidence  reports  for  cash-out  transactions  directly  with  the 
Board.   These  reports  are  then  forwarded  to  the  IRS  for  inclusion 
in  the  Detroit  Computing  Center  database  containing  the  other 
CTRCs . 

Prior  to  the  BSA  application  to  casinos,  money  laundering 
activities  occurred  involving  casinos  in  a  variety  of  ways 
including  the  purchase  of  chips  with  large  cunounts  of  cash  and 
later  redeeming  the  chips  for  casino  cashier ' s  checks  without 
significant  geunbling.   Casinos  also  have  been  utilized  to 
exchange  narcotics  proceeds  in  small  denomination  bills  for  $100 
bills  to  ease  smuggling  cash  out  of  the  country.   The  currency 
reporting  and  recordkeeping  features  of  the  BSA  have  enabled  the 
IRS  to  utilize  the  CTRCs  to  successfully  identify  and  prosecute 
individuals  involved  in  money  laundering  where  casinos  were 
involved.   The  following  are  only  a  few  such  examples. 

'     An  attorney  laundered  over  $3  million  dollars  of  drug 

proceeds  from  his  client  at  the  casinos  over  a  period  of 


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several  months.   The  attorney  exchanged  large  amounts  of 
cash  for  casino  cashier's  checks  without  any  substantive 
gcunbling  activity.   The  attorney  eventually  pled  guilty  to 
failure  to  file  CTRs  (since  the  attorney  was  acting  as  a 
non-bank  financial  institution),  conspiracy  to  launder  money 
and  drug  conspiracy.   He  was  sentenced  to  15  years  in 
prison. 

An  individual  using  false  identification,  cashed  out  casino 
chips  for  "high  rollers"  for  a  5%  fee.   The  "high  rollers", 
including  numerous  narcotic  traffickers  would  purchase  chips 
and  gamble  enough  to  avoid  suspicion  and  then  give  the  chips 
to  this  "five  percenter"  to  redeem  for  them.   The  "five 
percenter"  would  redeem  the  chips  in  $100  dollar  bills  and 
allow  the  CTRCs  to  be  filed  using  his  false  identification. 
Over  a  period  of  11  months,  5  casinos  filed  45  CTRCs 
totaling  over  $1  million,  containing  false  identification 
information  provided  by  the  "five  percenter".   The  "five 
percenter  was  eventually  prosecuted  and  convicted. 

An  attorney  entered  into  an  agreement  with  an  international 
heroin  smuggling  organization  to  launder  their  drug  proceeds 
for  a  fee  of  3%-5%,  depending  on  the  eunount  handled.   The 
attorney  took  receipt  of  millions  of  dollars  of  heroin 
proceeds  in  $5,  $10,  and  $20  dollar  bills.   The  attorney 
used  "smurfs"  to  exchange  these  small  bills  for  $100  bills 


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at  numerous  casinos.   The  less  voluminous  $100  bills  were 
then  smuggled  to  the  Bahamas,  Canada,  and  Bermuda.   The 
currency  was  then  shipped  from  Canada  and  Bermuda  by 
commercial  couriers  to  Switzerland  for  deposit  into  banks. 
Wire  transfers  were  used  to  move  the  money  from  the  Bahamas 
to  the  same  Swiss  banks. 

The  CTRCs  and  other  BSA  required  records  are  also  utilized 
for  successful  civil  and  criminal  tax  enforcement.   IRS 
Examination  and  Collection  divisions  utilize  this  data  to 
identify  potential  nonfilers  as  well  as  to  identify  unreported 
taxable  income. 

Although  subject  to  the  BSA  since  1985,  casinos  were  not 
previously  required  to  implement  a  BSA  compliance  program  within 
each  casino.   However,  Atlantic  City  casinos  did  voluntarily 
adopt  BSA  compliance  programs  as  far  back  as  November  1988. 
Pursuant  to  the  new  Treasury  Department  regulations  effective 
March  1,  1994,  each  casino  will  have  to  develop  and  implement  a 
BSA  compliance  program  reasonably  designed  to  assure  and  monitor 
compliance  with  the  BSA.   Each  compliance  program  is  required  to 
include  components  for: 

1)  internal  controls; 

2)  testing  (auditing)  of  compliance; 

3)  training  of  casino  personnel  in  BSA  compliance 
responsibilities ; 


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4)  appointment  of  personnel  to  assure  day-to-day 
compliance; 

5)  identification  of  required  persons; 

6 )  identifying  reportable  or  recordable  multiple 
transactions;  and, 

7)  use  of  in-house  information  and  computer  systems  to 
enhance  compliance. 

These  BSA  compliance  progreuns  are  similar  to  those  imposed 
on  all  federally  regulated  banks  since  1987  which  have  proven  to 
be  successful.   Treasury  BSA  compliance  initiatives,  such  as  the 
imposition  of  these  compliance  programs,  have  contributed  to  the 
significant  reduction  in  money  laundering  activity  involving 
traditional  banks.   Treasury  continues  to  work  with  the  casino 
industry  to  strengthen  the  industry ' s  commitment  to  preventing 
money  laundering . 

IV.   INDIAN  GAMING  INDUSTRY  AND  BANK  SECRECY  ACT  APPLICATION 

In  1988,  Congress  enacted  the  Indian  Gaming  Regulatory  Act, 
25  U.S.C.  2701  et .sea. .  which  governs  gaming  operations  conducted 
on  Indian  lands.   Section  20(d)(1)  of  the  Act  (25  U.S.C. 
2719(d)(1))  provides  that  certain  provisions  of  Title  26, 
including  Section  60501,  shall  apply  to  Indian  gaming  operations. 
There  is  a  technical  defect  in  the  Act  which  says  60501  pertains 
to  gambling  winnings.   Of  course  Section  60501  applies  only  to 
incoming  cash  and  not  to  cash-out  as  winnings.   Nevertheless,  it 


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is  our  view  that  Indian  Tribal  casinos  are  presently  subject  to 
the  limited  currency  reporting  requirements  under  Section  60501 
which  pertain  to  cash  received  and  contain  no  recordkeeping 
requirements.   In  comparison,  the  BSA  mandates  a  comprehensive 
currency  reporting  and  detailed  recordkeeping  system  with 
numerous  anti-money  laundering  safeguards. 

Based  upon  IRS ' s  investigative  and  regulatory  experience ,  we 
know  that  loose  or  inadequate  regulation  and  recordkeeping  will 
lead  to  enforcement  problems.   Over  the  past  ten  years  or  more, 
every  action  the  federal  government  has  taken  to  eliminate  or 
reduce  identified  methods  of  money  laundering,  has  generated  a 
counteract  by  the  creative  launderers  who  continue  to  expand  to 
new  and  inventive  methods  to  launder  their  illicit  proceeds .   We 
believe  the  I ndiari  Gaming  industry,  while  still  in  its  infancy, 
would  substantially  benefit  from  additional  regulation  and 
recordkeeping  covering  currency  transactions  to  implement 
additional  safeguards  for  deterrence  of  money  laundering. 

The  Indian  Gaming  industry  is  relatively  new  and  the  Act  has 
only  been  in  place  a  short  time.   Some  of  the  tribes  are  unsure 
of  their  new  responsibilities  pertaining  to  the  casinos  under 
federal  law.   In  this  regard,  IRS  Examination  has  initiated  an 
extensive  nationwide  outreach  progreun  aimed  at  educating  the 
Indian  geuning  industry  of  its  responsibilities. 


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IRS  Examination  is  working  with  the  tribes  to  better 
understand  issues  in  Indian  Country  and  has  developed  and 
implemented  a  plan  to  address  these  issues.   Activities  of  this 
plan  included  making  presentations  and  staffing  information 
booths/exhibits  at  tribal  conferences  dealing  with  Indian  Gaming 
such  as:   United  South  and  Eastern  Tribes  (USET);  National  Indian 
Gaming  Association  (NIGA) ;  1st  Annual  Indian  Nations  Gaming  and 
Trade  Show;  National  Conference  on  Indian  Gaming;  and.  National 
Congress  of  American  Indians  (NCAI)  mid-year  conference.   Future 
planned  conference  activities  involve  the  Northwest  Indian  Gciming 
Tribe  (NIGT)  and  the  Midwest  Indian  Gaming  Association  (MIGA) . 
The  Tribal  leaders  have  been  very  receptive  to  this  outreach 
process. 

IRS  Examination  is  also  chairing  an  inter-agency  task  force 
consisting  of  representatives  from  the  Department  of  the 
Treasury;  Department  of  the  Interior  (Bureau  of  Indian  Affairs, 
Indian  Gaming  Management  Office,  and  the  National  Indian  Gaming 
Commission);  Bureau  of  Alcohol,  Tobacco  and  Firearms;  and  all 
functions  of  the  IRS.   IRS  Examination  has  also  been  active 
within  the  IRS  organization  educating  the  Service  nationwide  on 
Indian  Geuning  and  related  issues. 


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V.    RECOMMEKDATIONS  AND  CONCLUSION 

Based  on  IRS  and  Treasury  involvement  with  the  Indian  Gaming 
industry  to  date,  I  am  providing  the  following  joint  IRS/Treasury 
recommendation  for  the  Subcommittee's  consideration. 

We  recommend  a  statutory  amendment  to  both  the  Bank  Secrecy 
Act  and  the  Indian  Gaming  Regulatory  Act  to  specify  that  Indian 
Gaming  operations  are  subject  to  the  Bank  Secrecy  Act  rather  than 
to  Section  60501.   The  comprehensive  nature  of  the  BSA  would 
provide  additional  safeguards  to  the  tribes,  while  providing  law 
enforcement  the  paper  trail  necessary  for  effective  and  efficient 
financial  enforcement. 

In  addition,   the  IRS  and  Treasury  plan  to  work  jointly  with 
the  Justice  Department  to  coordinate  a  national  Indian  Gcuning 
Conference  and  will  continue  the  ongoing  outreach-education 
initiatives  with  the  Indian  Gaming  industry. 

In  conclusion,  I  would  like  to  emphasize  that  our  goal  is  to 
strengthen  cooperative  relationships  among  the  Federal  agencies 
working  with  the  Indian  Gciming  industry.   I  thank  the 
Subcommittee  for  its  interest  in  our  activities  relating  to  money 
laundering  enforcement  and  the  Indian  Gaming  industry.   We  would 
be  pleased  to  respond  to  any  questions  you  may  have. 


147 

Mr.  Richardson.  Thank  you. 

The  chair  recognizes  the  gentleman  from  Wyoming. 

Mr.  Thomas.  Just  one  very  quick  question,  Mr.  Urgenson. 

When  you  are  asked  to  investigate  or  prosecute,  where  do  the 
complaints  come  from  normally?  Do  they  come  from  this  regulatory 
commission,  or  how  do  you  arrive  at  where  there  is  a  problem? 

Mr.  Urgenson.  Complaints  often  come— they  are  delivered  most 
often  in  the  field  to  the  local  United  States  Attorney's  office  or  the 
to  the  FBI,  and  perhaps  Mr.  Moody  could  elaborate  more  specifi- 
cally. 

Mr.  Moody.  Concerning  organized  crime  investigations,  over  90 
percent  of  all  of  our  investigations  are  based  upon  our  own  intel- 
ligence base.  We  don't  have  that  many  people  come  through  the 
front  door  and  tell  us  about  organized  crime. 

Mr.  Thomas.  Well,  that  is  good.  I  am  glad  to  hear  that. 

I  am  just  curious.  You  need  some  sort  of  a  regulatory  group,  it 
would  seem  to  me.  That  is  not  your  role,  is  it,  in  the  Justice  De- 
partment? 

Mr.  Urgenson.  Typically,  in  a  regulated  industry,  a  good  portion 
of  the  referrals  come  from  the  regulatory  community.  That  is  an  ac- 
curate statement,  yes. 

Mr.  Thomas.  Tell  me  just  quickly  the  comparison  between — what 
is  your  involvement  in  private  gaming  such  as  in  New  Jersey  that 
is  not  tribal?  Do  you  have  any  particular  involvement  in  that? 

Mr.  Urgenson.  The  involvement,  I  suppose,  would  be  limited  to 
federal  crimes,  such  as  organized  crime  and  perhaps  money  laun- 
dering, and  Mr.  Moody  indicates  he  would  like  to  add  to  that. 

Mr.  Moody.  We  have  memoranda  of  understanding  with  both 
Nevada  and  New  Jersey,  groups  that  address  the  gaming  in  those 
States.  Both  of  them  have  law  enforcement  authority,  so  it  makes 
it  very  easy  to  work  with  them. 

Mr.  Thomas.  So  your  involvement  with  tribal  gaming  and 
nontribal  gaming  is  similar? 

Mr.  Moody.  With  tribal  gaming,  it  is  different  in  that  we  have 
requests  come  in  and  we  respond  to  them,  but  not  all  of  the  agen- 
cies that  have  oversight  have  law  enforcement  authority,  so  we 
can't  quite  share  the  same  type  of  information. 

Mr.  Thomas.  I  see. 

Thank  you,  Mr.  Chairman. 

Mr.  Richardson.  The  chair  recognizes  the  gentleman  from  Cali- 
fornia. 

Mr.  Calvert.  Thank  you,  Mr.  Chairman. 

My  question  is  also  for  Mr.  Psdmer. 

In  California,  as  you  know,  we  only  have  Class  2  gaming.  How- 
ever, there  are  certain  reservations  that  are  engaged  in  Class  3 
gaming  at  the  present  time.  The  National  Indian  Gaming  Commis- 
sion is  only  empowered  to  enforce  Class  1  and  Class  2  gaming,  and 
so  the  Class  3  gaming  in  California  is  not  being  regulated. 

The  700-plus  slot  machines  that  are  in  California  at  the  present 
time — ^what  types  of  controls  are  in  place  at  the  present  time  to 
find  out  where  that  money  was  coming  from  and  where  it  is  going? 

Mr.  Palmer.  Congressman,  I  don't  know  if  I  can  answer  that 
specifically,  but  right  now,  as  I  stated,  as  far  as  the  civil  side  of 
the  Internal  Revenue  Service,  Department  of  the  Treasury,  that 


148 

would  fall  under  the  compliance  of  the  Examination  Division.  I  can- 
not specifically  answer.  I  don't  know  exactly  what  we  are  doing  in- 
sofar as  those  specific  locations  in  California.  But  I  will  be  happy 
to  get  back  to  you  and  provide  you  with  the  record  of  that. 

But  as  I  said  in  my  statement,  as  long  as  those  activities  do  not 
fall  under  the  supervision  of  the  Federal  Bank  Regulatory  or  the 
SEC,  they  would  fall  under  the  purview  of  the  Examination  Divi- 
sion as  far  as  civil  oversight. 

Mr.  Calvert.  What  mechanisms  are  currently  in  place  to  ensure 
that  the  cash  flow  in  an  Indian  casino  is  fully  and  effectively  mon- 
itored? 

Mr.  Palmer.  Pardon?  Could  you  repeat  that? 

Mr.  Calvert.  What  mechanisms?  Is  this  the  same?  Would  it  be 
the  same  answer?  What  mechanisms  are  currently  in  place  to  en- 
sure that  the  cash  flow  in  an  Indian  casino  is  fully  and  effectively 
monitored? 

Mr.  Palmer.  That  would  also  be  within  the  Examination  Divi- 
sion. 

Mr.  Calvert.  So  we  would  need  to  talk  to  someone  within  the 
Examination  Division  to  get  an  answer  to  those  questions. 

Mr.  Palmer.  Yes,  sir. 

Mr.  Calvert.  I  understand — and  maybe  this  question  would  go 
back  to  Mr.  Moody — that  there  is  no  control  on  the  revenue  that 
is  coming  out  of  those  slot  machines,  for  instance,  in  California.  Is 
that  an  accurate  statement? 

Mr.  Moody.  I  believe  that  is  an  accurate  statement,  yes,  sir. 

Mr.  Calvert.  I  understand  that  there  is  also  no  control  on  the 
types  of  odds  on  those  machines  or  the  quality  of  the  machines.  Is 
that  an  accurate  statement? 

Mr.  Moody.  I  believe  that  is  an  accurate  statement. 

Mr.  Calvert.  I  also  understand  that  the  National  Indian  Gam- 
ing Commission  has  no  right,  no  jurisdiction,  to  involve  itself  in 
Class  3  gaming  in  California  since  Class  3  gaming  technically  is 
not  legally  permissible  in  California,  so  nobody  is  regulating  that. 
Is  that  an  accurate  statement? 

Mr.  Moody.  I  would  rather  you  asked  that  with  the  Gaming 
Commission,  sir.  As  far  as  I  know  in  California,  there  are  some 
regulatory  agencies  set  up  because  you  also  have  the  card  clubs  out 
there.  The  specificities  of  what  the  Gaming  Commission  does,  I 
would  appreciate  it  if  you  would  refer  that  to  them. 

Mr.  Calvert.  Do  we  have  any  idea  then  if  it  is  accurate  to  say 
that  that  revenue  isn't  being— do  we  know  where  the  money  came 
from  in  the  first  place  to  acquire  those  slot  machines?  Do  we  have 
any  knowledge  of  that? 

Mr.  Moody.  No,  sir,  I  don't.  I  can  look  into  it. 

Mr.  Calvert.  If  I  can  continue  on  this,  it  is  common  knowledge 
that  Class  3  gaming  is  being  conducted  on  many  California,  New 
Mexico,  Washington  State  Indian  reservations  without  a  tribal- 
State  compact,  including  electronic  games  of  chance,  video-poker, 
slot  machines,  and  video  black  jack.  Is  it  not  a  violation  of  State 
and  Federal  law  to  conduct  such  gaming  without  a  compact,  as- 
suming the  States  can  compact  for  the  games  in  the  first  place? 

Mr.  Urgenson.  I  think  it  would  be  a  violation  of  the  law  to  con- 
duct Class  III  games  without  a  compact,  that  is  correct,  and  the 


149 

issue  for  us  is  whether  or  not  it  would  be  something  which  war- 
rants law  enforcement,  criminal  law  enforcement,  involvement. 

As  I  have  attempted  to  indicate  in  our  statement,  that  is  a  very 
complicated  question  which  requires  an  analysis  of  the  specific 
facts,  and  if  there  is  any  specific  evidence  of  such  conduct  which 
should  be  addressed  in  California,  I  think  it  should  be  addressed 
through  the  United  States  Attorney's  office  there. 

Mr.  Calvert.  To  carry  on  from  what  you  just  said,  why  is  the 
Federal  Government  allowing  Class  3  gaming  to  take  place  in  Cali- 
fornia if,  in  fact,  it  is  not  allowed? 

Mr.  Urgenson.  I  am  not  familiar  with  the  specific  factual  situa- 
tion in  California,  so  I  can't  give  you  a  detailed  response.  What  I 
have  generally  tried  to  address  in  my  statement  is  that  there  are 
instances  in  which  it  is  alleged  that  illegal  Class  III  gaming  is 
going  on  in  a  particular  jurisdiction,  and  whether  or  not  it  is  in  fact 
Class  III  gaming,  whether  or  not  the  classification  is  in  question, 
whether  there  are  ongoing  negotiations  with  respect  to  a  compact, 
whether  or  not  there  is  litigation  in  court  concerning  the  fairness 
with  which  the  States  have  dealt  with  the  tribes,  are  all  factors 
that  are  considered  in  a  specific  case  as  to  whether  or  not  we  are, 
as  you  might  suggest,  allowing  something  or  acting. 

Mr.  Calvert.  I  will  ask  Mr.  Moody. 

Mr.  Moody,  do  you  think  that  700  slot  machines  in  Southern 
California  would  classify  as  Class  3  gaming? 

Mr.  Moody.  That  depends  upon  my  counsel  here  on  my  right. 
Whenever  we  have  situations  like  that,  quite  frankly,  we  wait  until 
it  is  cleared  up  more  before  we  commit  manpower  to  conduct  inves- 
tigations on  something  like  that. 

Mr.  Calvert.  I  had  just  one  more  question  for  you,  Mr.  Moody. 
There  was  an  article  in  U.S.  News  some  time  ago  when  you  were 
asked  a  question,  "Which  crime  families  are  involved  in  Indian 
gaming?"  Do  you  remember  your  answer  to  that  question? 

Mr.  Moody.  No,  sir,  I  don't. 

Mr.  Calvert.  According  to  U.S.  Business  News  Report,  "I  don't 
know  of  any  that  aren't." 

Mr.  Moody.  No,  that  is  not  quite  a  quote.  The  question  was, 
"Which  crime  families  would  be  interested  in  Indian  gaming?  "  And 
I  believe  that  I  responded  that  I  don't  believe  I  would  know  that 
any  wouldn't  be. 

If  you  go  back  to  my  original  definition,  organized  crime  address- 
es— they  are  after  money,  and  any  time  they  can  penetrate  a  gam- 
bling operation  that  generates  large  amounts  of  money,  they  will, 
but,  as  Mr.  Urgenson  said,  we  do  not  see  a  concerted  effort  by  orga- 
nized crime  to  infiltrate  Indian  gaming.  We  have  had  a  couple  of 
instances  that  we  have  investigated;  we  have  had  one  that  we  have 
prosecuted. 

Mr.  Calvert.  Thank  you,  Mr.  Chairman. 

Mr.  Richardson.  I  recognize  the  gentleman  from  Hawaii. 

Mr.  Abercrombie.  Thank  you,  Mr.  Chairman. 

Mr.  Urgenson,  on  page  4  of  your  testimony,  you  say,  "Similarly, 
there  has  been  little  evidence  of  illegal  activity  committed  by  crimi- 
nal elements  not  associated  with  major  organized  crime  families." 
And  then  in  reference  to — keeping  that  in  mind,  if  you  would — ^Mr. 
Palmer's  testimony,  which,  parenthetically,  Mr.  Palmer,  I  want  to 


150 

say  is  exceptionally  well  stated.  It  has  taken  a  relatively  com- 
plicated issue  that  some  of  us  may  not  be  familiar  with  and  stated 
it  in  such  a  way  as  it  makes  it  crystal  clear  as  to  what  we  are  deal- 
ing with. 

Mr.  Palmer's  testimony — I  don't  know  if  you  have  had  a  chance 
to  go  over  it  in  detail,  Mr.  Urgenson 

Mr.  Urgenson.  No,  but  I  have  listened  to  it. 

Mr.  Abercrombie.  Okay — indicates  that  a  lot  of  the  difficulties 
with  respect  to  casinos  are  outside  forces  or  elements,  like  lawyers 
trying  to  launder  drug  money,  for  example,  trying  to  utilize  a  ca- 
sino. Am  I  correct  that  this  could  be  done  by  any  person  intent 
upon  that  kind  of  activity  in  any  casino,  whether  it  was  Indian 
gaming  or  anybody  else  legitimately  pursuing  gambling? 

Mr.  Urgenson.  I  think  that  is  a  fair  statement. 

Mr.  Abercrombie.  Is  that  your  contention  also,  Mr.  Palmer? 

Mr.  Palmer.  Yes. 

Mr.  Abercrombie.  That  it  wouldn't  necessarily  be  zeroing  in  on 
Indian  gambling? 

Mr.  Palmer.  No,  of  course  not. 

Mr.  Abercrombie.  Then,  Mr.  Palmer,  if  I  could  go  to  you,  the  lat- 
ter part  of  your  testimony  on  page  15  and  16 — would  it  be  correct 
to  summarize  that  testimony  as  indicating  that  you  have  a  good 
working  relationship  with  various  tribal  groupings  and  gambling — 
gaming  interests  among  tribes  with  respect  to  what  their  obliga- 
tions are  and  what  they  can  do  to  improve  their  capacity  to  resist 
this  kind  of  infiltration,  criminal  infiltration? 

Mr,  Palmer.  Congressman,  I  would  answer  that,  we  are  still  in 
the  infancy,  but  our  experience,  you  know,  during  this  infancy,  is, 
I  would  say  yes,  we  have  had  a  very  good  reception  from,  I  think, 
most,  if  not  all,  the  tribal  leaders,  trjdng  to  educate  them  in  our 
outreach  process,  and,  as  I  said,  educate  them  as  to  what  their  re- 
quirements are  so  that  they  can  be  in  compliance  with  60501,  or, 
if  this  changed,  to  the  Bank  Secrecy  Act,  to  ensure  the  proper  safe- 
guards and  checks  and  balances  will  be  there. 

Mr.  Abercrombie.  Then  finally,  are  the  recommendations  that 
you  are  making  in  your  testimony — and  I  want  to  indicate,  I  have 
only  gone  over  your  testimony  this  morning,  so  I  may  have  missed 
a  sentence  or  two  that  more  specifically  addresses  my  questions. 
But  are  the  recommendations  that  you  are  making  with  respect  to 
the  Bank  Secrecy  Act  and  the  60501  regulations — are  you  making 
these  recommendations  with  respect  to  all  reporting  with  respect  to 
gambling  transactions,  gaming  transactions,  or  more  specifically  to- 
wards gaming  and  tribal  activity? 

Mr.  Palmer.  I  will  let  Mr.  Djinis 

Mr.  Djinis.  Maybe  if  I  can  clarify — I  hope  I  understand  the  ques- 
tion correctly — I  think  the  recommendation  essentially  is  that  the 
Treasury  Department  be  authorized  to  place  and  to  issue  regula- 
tions that  would  place  Indian  casinos  under  the  Bank  Secrecy  Act, 
under  the  same  types  of  requirements  that  are  subject  now. 

That  is  not  to  say  that  every  form  of  Indian  gaming,  whether  it 
is  a  slot  machine  or  other  kinds  of  gaming,  would  be  subject  to  the 
Bank  Secrecy  Act  but,  rather,  the  same  kinds  of  standards  that  are 
employed  now  for  nontribal  gaming. 


151 

Right  now,  the  Treasury  Department  has  regulations  which  es- 
sentially kick  in  at  a  $1  million  gross  earnings  level  per  year,  and 
presumptively  the  same  standards  would  apply  for  tribal  gaming. 

Mr.  Abercrombie.  So  you  see  the  principal  danger  here  over  and 
above  the  questions  of  whether  it  is  a  good  idea  to  have  gaming  or 
not  or  whether  there  is  an  adequate  compact  negotiated,  and  I  am 
taking  into  consideration  Mr.  Urgenson's  multiple  examples  of  the 
difficulties  of  trying  to  decide  whether  to  prosecute  something  or 
whether  to  move  forward  on  any  legal  basis,  civil  or  otherwise, 
keeping  that  in  mind.  Your  intentions  here  are  to  deal  principally 
with  laundering  activities  and  other  activities  that  would  be  crimi- 
nal in  nature  over  an  above  the  question  of  the  operation  of  the  ca- 
sinos themselves,  right — the  gaming  operations  themselves? 

Mr.  Palmer.  Yes,  that  is  correct.  Congressman. 

Mr.  Abercrombie.  Now,  are  there  any  exemptions  presently  ex- 
isting to  the  kind  of  reporting  processes  that  you  are  recommend- 
ing here? 

Mr.  Palmer.  No,  other  than  the  fact  right  now  the  Indian  casinos 
are  under  60501  versus  the  BSA,  the  Bank  Secrecy  Act,  and  an  ex- 
ample I  gave,  right  now  under  60501,  the  filing  of  the  Form  8300 
really  only  gives  us  the  first  half  or  the  first  third  of  the  trans- 
action— that  is,  the  money  the  player  brings  into  the  casino — 
whereas  the  amendment  into  the  Bank  Secrecy  Act  will  show  all 
the  exchanges  of  money  which  happen,  not  only  the  money  that  is 
brought  into  the  casino,  the  exchange  for  chips,  the  winnings, 
winnings  from  the  slots,  it  gives  the  whole  financial  picture  so 
there  is  an  adequate  audit  trail  then  for  financial  or  law  enforce- 
ment purposes. 

Mr.  Abercrombie.  Would  it  be  fair  to  say  that  if  your  rec- 
ommendations were  incorporated  into  the  existing  law  and/or  regu- 
lations that  come  from  the  existing  law,  that  this  would  go  a  long 
way  toward  ensuring  both  the  tribes  and  the  general  public  that 
the  operations  were  being  conducted  on  a  basis  that  were  as  devoid 
as  possible  of  infiltration  of  criminal  activity? 

Mr.  Palmer.  I  believe  it  would  be  a  major  step  in  the  right  direc- 
tion, yes. 

Mr.  Abercrombie.  Thank  you  very  much. 

Mr.  Richardson.  The  chair  recognizes  the  chairman  of  the  com- 
mittee. 

Mr.  Miller.  Thank  you. 

Following  up  on  Mr.  Abercrombie's  point,  is  there  anything  in 
the  law  that  would  prohibit  the  Secretary  to  extend  these  provi- 
sions of  the  Bank  Secrecy  Act  to  the  Indian  gaming? 

Mr.  Djinis.  Well,  generally  the  way  that  the  currency  reporting 
statutes — the  Federal  currency  reporting  statutes — work  is  that  ei- 
ther you  are  a  financial  institution,  which  is  defined  under  our  reg- 
ulations, or  you  are  a  trade  or  business. 

Right  now,  our  regulations  do  not  define  tribal  casinos  as  a  ca- 
sino. Therefore,  it  is  not  a  financial  institution  and  not  subject  to 
the  Bank  Secrecy  Act.  Therefore,  it  is  a  trade  or  business,  and  that 
is  consistent  with  the  Indian  Gaming  Regulatory  Act  and  to  the  ad- 
monition that  60501  reporting  should  occur. 


152 

So  it  is  our  view  that  unless  the  statute  is  changed,  tribal  casinos 
are  not  subject  to  the  Bank  Secrecy  Act  and  we  cannot  issue  a  reg- 
ulation to  that  effect. 

Mr.  Miller.  What  is  the  arrangement  with  the  State  of  Nevada 
in  the  Bank  Secrecy  Act? 

Mr.  Djinis.  The  State  of  Nevada,  pursuant  to  regulations  in  the 
Bank  Secrecy  Act  and  pursuant  to  a  memorandum  of  understand- 
ing between  Treasury  and  the  State  executed  in  1985,  has  adopted 
its  own  parallel  system  of  reporting,  if  you  will,  where  it  is  sub- 
stantially similar  to  the  Bank  Secrecy  Act. 

Those  reports  are  submitted  to  the  Nevada  regulators,  which  in 
turn  are  submitted  to  the  Internal  Revenue  Service,  but  the  report- 
ing itself  goes  from  the  casino  to  the  regulator  and  then  ultimately 
to  the  Internal  Revenue  Service. 

Mr.  Miller.  Does  the  IRS  reserve  to  itself  the  right  to  audit 
that?  Has  the  IRS  authority  under  law  to  audit  those  reports? 

Mr.  Djinis.  Well,  it  is  interesting  you  should  ask  that  question. 
Traditionally,  the  examination  component  has  been  conducted  by 
the  State,  but  the  State — ^we  had  meetings  with  the  State  just 
three  weeks  ago,  I  believe,  and  we  are  going  to  be  doing  a  joint 
compliance  examination. 

So  there  is  nothing  that  prohibits  compliance  examinations  being 
conducted  by  the  Internal  Revenue  Service,  and  we  will  see  how 
this  one  works  out. 

Mr.  Miller.  So  what  is  the  current  arrangement  prior  to  this 
new  process?  They  do  this  auditing  themselves,  and  they  turn  that 
in  to  the  IRS.  For  what  use  by  the  IRS? 

Mr.  Djinis.  Let  me  just  see  if  I  can  clarify. 

Mr.  Miller.  Thank  you. 

Mr.  Djinis.  The  auditing  that  I  am  referring  to — and  I  hope  it 
is  the  same  question  that  you  are  referring  to — is  the  auditing  or 
the  examination  by  the  Nevada  regulators,  by  the  Nevada  Gaming 
Control  Board,  over  the  casino's  compliance  with  Nevada's  report- 
ing system  and  other  provisions. 

Mr.  Miller.  The  purpose  of  which  is  the  same  as,  in  theory,  the 
same  as 

Mr.  Djinis.  The  purpose  is  identical  in  theory  to  the  examination 
component  that  the  Internal  Revenue  Service  performs  when  exam- 
ining casinos'  compliance  in  Atlantic  City,  for  example,  with  the 
Bank  Secrecy  Act. 

Mr.  Miller.  But  when  you  went  through  your  examples  of  Ca- 
sino A  and  Casino  B,  the  purpose  of  the  Bank  Secrecy  Act  in  the 
Nevada  regulatory  scheme  is  for  the  purposes  of  watching  the  flow 
of  the  money,  for  the  purpose  of  laundering.  Is  that  correct? 

Mr.  Djinis.  Well,  I  think  it  is  a  broader  purpose.  Number  one, 
the  purpose — there  are  three  recognized  components  of  the  Bank 
Secrecy  Act:  Its  use  in  criminal  investigations  and  proceedings,  in- 
cluding investigations  concerning  financial  crime;  its  use  in  identi- 
fying tax  enforcement  essentially,  to  be  utilized  for  tax  enforcement 
purposes;  and  the  third,  as  you  have  mentioned,  consistent  with 
the  Bank  Secrecy  Act,  is  for  determining  regulatory  compliance. 

So  clearly,  money  laundering  is  a  very  important  component,  but 
there  are  three  vital  interests  that  are  in  effect  in  the  Bank  Se- 
crecy Act. 


153 

Mr.  Miller.  But  those  records  are — basically,  Nevada  has  set  up 
its  own  system  of  compliance  and  then  has  its  own  system  of  audit- 
ing whether  or  not  compliance  is  taking  place,  and  that  is  the  end 
of  the  process.  They  turn  the  data  over  to  the  IRS,  but  the  IRS, 
under  the  current  system  today,  has  no  ability  or  does  not  go  in 
and  audit  whether  or  not  the  compliance  is  achieving  the  goals  for 
the  purpose  for  which  it  was  set  up  an/or  whether  it  is  accurately 
done.  That  is  not  done  today? 

Mr.  Djinis.  Well,  I  cannot — obviously,  I  am  not  with  the  Nevada 
Gaming  Control  Board,  so  I  can't  speak  to  the  efficacy  of  their  ex- 
amination process. 

Mr.  Miller.  I  understand  that. 

Mr.  Djinis.  What  I  can  say  is  that  there  is  a  process  in  the  State, 
and  we  will  find  out  there  through  this  joint  examination.  At  least 
there  will  be  an  inquiry  into  the  utility  of  the  program  there. 

The  Gaming  Control  Board  in  the  Nevada  has  not  sat  idly  by; 
they  have  enforced  violations  of  their  own  compliance  program  over 
the  years. 

Mr.  Miller.  But  in  terms  of  the  injection  of  what  is  this  new  ar- 
rangement that  you  are  laying  out,  you  are  now  injecting  essen- 
tially Federal  oversight,  because  you  will  go  through  a  joint  audit- 
ing process  to  determine  whether  or  not  the  purposes  of  the  Bank 
Secrecy  Act  are  in  fact  being  complied  with  by  this  system  of  State 
regulation  that  is  put  in,  in  lieu  of  the  Bank  Secrecy  Act. 

Mr.  Djinis.  I  think  that  is  correct. 

Mr.  Miller.  To  date,  we  don't  know  that,  as  a  matter  of  ongoing 
oversight.  We  may  know  it  in  a  specific  case  where  one  system 
broke  down  or  you  didn't  catch  one  transaction  and  somebody 
might  have  caught  it  under  a  different  system,  but  that  is  not  a 
matter  of  ongoing  oversight. 

Mr.  Djinis.  That  is  correct. 

Mr.  Miller.  Why  are  you  going  to  this  new  regime? 

Mr.  Djinis.  There  are  a  number  of  different  reasons,  and  I  think 
the  best  way  to  describe  it  is  that  the  thinking  has  evolved,  the 
thinking  in  terms  of  anti-money-laundering  compliance,  the  think- 
ing in  terms  of  our  experience  with  examining  casinos  and  the  In- 
ternal Revenue  Service's  experience  with  examining  casinos  in 
other  properties  such  as  New  Jersey  and  in  Puerto  Rico. 

We  have  a  certain  degree  of  expertise  to  offer,  and  I  think  it  is 
also  true  that  Nevada,  which  has  been  dealing  with  these  subjects, 
has  their  own  degree  of  expertise  to  offer.  We  see  gaming  extending 
to  numerous  other  States,  and  it  is  time  for  us  now  to  start  work- 
ing together. 

Although  there  is  a  parallel  system  in  place  in  Nevada,  that  is 
not  to  suggest  that  either  we  can't  learn  from  the  systems  that 
have  been  employed  in  Nevada  or  that  I  believe  the  Nevada  Gam- 
ing Control  Board  can  learn  from  some  of  the  techniques,  the  au- 
diting programs,  the  computer  software  that  we  have  developed  to 
ensure  compliance  with  the  BSA  as  well.  It  is  time  for  us  to  start 
working  together. 

Mr.  Miller.  What  is  the  rate  of  violation  today  within  the  casino 
industry  in  the  Bank  Secrecy  Act? 

Mr.  Djinis.  The  rate  of  violation? 


154 

Mr.  Miller.  Do  you  get  five  a  year?  Ten  a  year?  How  many 
transactions?  Is  this  a  lot  of  transactions  that  are  monitored?  There 
are  obviously  a  lot  of  transactions,  I  assume,  that  are  monitored. 
Mr.  Djinis.  All  of  the  currency  reports  are  fed  into  a  database, 
a  Treasury  database,  and  I  don't  have  the  exact  figures  with  me 
right  now,  but  I  believe  we  are  looking  at  something  in  the  nature 
of  approximately  60,000  such  transactions,  all  in  excess  of  $10,000 
in  currency  that  are  filed  annually. 

Mr.  Miller.  And  the  Justice  Department — the  compliance, 
where  are  you  on  that?  Is  this  all  done  in  compliance,  or  are  there 
people  out  of  compliance?  Do  you  have  prosecutions  open? 

Mr.  Urgenson.  I  am  not  aware  of  specific  instances,  or  statistics, 
I  should  say,  with  respect  to  casino-based  prosecutions.  I  know  that 
evidence  of  money  laundering  in  casinos  frequently  comes  up  in 
connection  with  white-collar  and  other  kinds  of  prosecutions.  So  it 
is  a  very  useful  database  to  have,  and  there  is  a  lot  of  money 
laundered  through  casinos.  But  I  couldn't  give  you  a  specific  statis- 
tic as  I  am  sitting  here. 

Mr.  Miller.  I  guess  what  I  am  trsdng  to  determine  is,  given  the 
Bank  Secrecy  Act  and  the  regulatory  schemes  that  we  have  set  up, 
this  apparently — what  you  are  saying  is  that  it  is  apparently  a  sort 
of  typical  endeavor  to  try  and  launder  money.  Whether  or  not  you 
are  successful  or  not  is  different,  but  this  is  looked  upon  as  an  in- 
dustry in  which  you  can  certainly — it  is  worth  making  the  attempt, 
or  do  people  attempt  it  on  a  regular  basis? 

Mr.  Urgenson.  I  think  that  is  a  fair  statement,  yes. 

Mr.  Miller.  It  is  a  method. 

Mr.  Moody.  By  an  individual  generally.  If  you  have  an  organized 
crime  group  take  over  the  casino,  they  are  going  to  launder  it  any- 
way and  not  comply  with  that  in  the  first  place.  But  then  the  law 
itself  enables  us  to  later  on  reconstruct  what  happened.  The  major- 
ity of  money  laundering  in  casinos  is  a  method  by  an  individual  to 
try  to  launder  money  through  the  casino. 

Mr.  Miller.  And  that  is  picked  up  how? 

Mr.  Moody.  Various  ways:  Through  the  computer  database 
maintained  by  Treasury,  and/or  later  on  we  may  come  up  with  in- 
formation of  a  certain  individual  being  involved  in  drug  trafficking 
or  some  other  activity,  where  we  go  back  and  trace  his  activities. 

Mr.  Miller.  So  it  is  not  an  uncommon  attempt. 

Mr.  Moody.  No,  it  is  not  uncommon. 

Mr.  Miller.  How  common  are  the  prosecutions  for  it? 

Mr.  Moody.  It  is  getting  so  in  almost  all  prosecutions  the  FBI 
has  on  organized  crime  and  white  collar  crime  that  money  launder- 
ing is  involved  in  it.  So  money  laundering  of  some  sort  is  very  ac- 
tive, because  people  are  always  trying  to  generate  the  illegal  mon- 
ies into  legal  monies.  Now  how  much  is  coming  out  of  the  casinos 
I  don't  know,  sir. 

Mr.  Miller.  How  common  are  prosecutions  against  casinos? 

Mr.  Moody.  Not  very  common  at  all,  sir.  It  has  been  a  number 
of  years  since  we  have  had  any  against  a  casino.  The  casinos  them- 
selves don't  want  the  money  laundering  because  they  are  worried 
about  the  taint  that  would  go  along  with  it. 

Mr.  Miller.  It  affects  their  license  obviously,  I  assume. 

Mr.  Moody.  Yes,  sir. 


155 

Mr.  Djinis.  Mr.  Chairman,  if  I  could  clarify  again,  I  think  there 
was  testimony  that  was  alluded  to  earlier  about  what  the  Bank  Se- 
crecy Act  involves,  and  frankly,  although  the  true  enforcement  of 
the  Bank  Secrecy  Act  is  going  to  be  by  compliance  by  casinos,  that 
is  not  to  suggest  that  the  currency  reports  that  are  required  are 
there  to  somehow  implicate  a  casino. 

In  fact,  the  majority  of  our  interest  is  on  the  patrons'  activity,  not 
on  the  activity  of  a  particular  financial  institution,  and  a  lot  of  the 
research,  the  proactive  targeting,  or  whatever,  that  is  done  is  fo- 
cused upon  individuals  or  people  who  are  identified  with  organiza- 
tions who  happen  to  be  conducting  transactions  through  a  casino. 

The  second  thing  I  would  like  to  clarify  is  that  it  is  not  so  much 
that  casinos  represent  the  most  prevalent  form  of  money  launder- 
ing or  tax  evasion  or  whatever.  Casinos,  like  other  kinds  of  bank 
and  nonbank  financial  institutions  under  the  Bank  Secrecy  Act,  are 
subject  to  currency  reporting  and  other  kinds  of  record-keeping  re- 
quirements in  order  to,  if  nothing  else,  have  a  chilling  effect  to 
properly  identify  individuals  engaged  in  those  transactions  and  to 
make  sure  that  there  is  an  audit  trail  of  those  transactions  when 
they  involve  currency. 

Mr.  Miller.  That  is  not  to  suggest  that  there  hasn't  been  institu- 
tional involvement  in  intentional  attempts  to  go  around  the  Bank 
Secrecy  Act. 

Mr.  Djinis.  I  am  not  suggesting  that  at  all.  What  I  am  suggest- 
ing is  that  there  is  more  than  a  focus  against  the  financial  institu- 
tion, whether  it  is  a  casino  or  a  money  transmitter  or  a  savings  and 
loan.  It  is  also  on  the  transactions. 

Mr.  Miller.  I  understand,  but  the  Act  is  set  up  recognizing  that 
there  are  two  parties  to  the  transaction,  right? 

Mr.  Djinis.  That  is  correct. 

Mr.  Miller.  Okay.  Thank  you. 

Mr.  Richardson.  Does  the  gentleman  from  New  Jersey  wish  to 
be  recognized  for  questions? 

Mr.  TORRICELLI.  If  I  could,  Mr.  Chairman,  for  a  few  moments. 

Mr.  Moody,  your  title  is  that  you  are  with  the  organized  crime 
and  drug  operations  of  the  FBI? 

Mr.  Moody.  Yes,  sir. 

Mr.  Torricelli.  And  who  is  it  that  heads  your  task  force  on  in- 
vestigating Indian  gaming? 

Mr.  Moody.  If  it  has  an)i;hing  to  do  with  organized  crime,  I  am 
responsible. 

Mr.  Torricelli.  No.  I  mean  your  dedicated  task  force  to  Indian 
gaming.  Who  runs  that  operation  on  a  day-to-day  basis? 

Mr.  Moody.  We  don't  have  a  dedicated 

Mr.  Torricelli.  You  don't  have  a  task  force? 

Mr.  Moody.  No,  sir. 

Mr.  Torricelli.  We  have  in  New  Jersey  985  people  who  monitor 
18  casinos,  virtually  an  inspector  per  table.  How  many  agents  do 
you  have  dedicated  to  dealing  with  the  problems  of  corruption  on 
Indian  reservations  on  a  full-time  basis,  as  we  do — ^the  number  of 
people  who  are  dedicated  to  this  purpose? 

Mr.  Moody.  Concerning  Indian  reservations  themselves,  we  have 
other  responsibilities  on  the  Indian  reservations. 


156 

Mr.  TORRICELLI.  I  understand  that.  But  dealing  with  the  prob- 
lems of  gaming  we  are  focused  on. 

Mr.  Moody.  Okay.  Let  me  take  a  step  back.  Concerning  the  In- 
dian reservations,  we  have  about  44  agents  assigned  to  the  Indian 
reservations  to  conduct  all  sorts  of  investigations. 
Mr.  TORRICELLI.  On  all  purposes,  you  have  44. 
Mr.  Moody.  Yes,  sir,  organized  crime  investigators. 
Mr.  TORRICELLI.  How  many  Indian  gaming  establishments  are 
there  in  the  country? 
Mr.  Moody.  They  are  growing  rapidly  every  day. 
Mr.  TORRICELLI.  Well,  isn't  it  fair  to  say  there  are  124? 
Mr.  Moody.  Right. 

Mr.  TORRICELLI.  Now  I  am  told  that  while  we  in  New  Jersey 
have  an  inspector  on  each  table  each  day  in  every  casino,  you  do 
not  have  enough  agents,  in  fact,  involved  in  dealing  with  corruption 
on  Indian  reservations  that  they  could  be  visited  on  an  annual 
basis.  Would  that  be  a  fair  statement? 

Mr.  Moody.  We  are  not  visiting  casinos  for  regulatory  functions 
on  the  Indian  reservations. 

Mr.  TORRICELLI.  I  see.  So  during  the  course  of  a  year,  a  year 
could  pass  and,  in  fact,  these  casinos  could  never  be  visited  by  a 
Federal  official  under  your  jurisdiction.  That  would  be  a  fair  com- 
mentary? 
Mr.  Moody.  That  is  very  possible. 
Mr.  Miller.  Would  the  gentleman  yield? 
Mr.  TORRICELLI.  I  would  be  happy  to  yield  to  the  chairman. 

Could  I  go  through  a  few  questions  and  then 

Mr.  Miller.  Just  on  that  point,  your  jurisdiction  is  organized 
crime,  not  casinos? 

Mr.  Moody.  That  is  correct.  My  jurisdiction  is  organized  crime. 
Now  in  organized  crime  I  have  903  agents. 

Mr.  Miller.  They  work  on  the  organized  crime  end  of  the  spec- 
trum. 
Mr.  Moody.  That  is  correct. 

Mr.  TORRICELLI.  Well,  let's  take  them  that  way.  How  many  of 
those  organized  crime  people  are  dedicated  to  dealing  with  orga- 
nized crime  involvement  in  Indian  gaming?  I  will  take  the  chair- 
man's distinction;  it  is  a  fair  point.  How  many  of  those  are  dedi- 
cated to  dealing  with  organized  crime  in  Indian  gaming? 
Mr.  Moody.  I  do  not  dedicate  any  of  them  to  organized  crime  in 

casinos,  but  I  do  dedicate  them 

Mr.  TORRICELLI.  So  the  answer  is  essentially  the  same,  none. 
Mr.  Moody.  But  I  do  dedicate  them  to  organized  criminal  groups. 
Mr.  Miller.  Let  the  gentleman  finish. 

Mr.  TORRICELLI.  Yes,  I  would  be  glad  to  have  him  finish.  I  would 
like,  though,  for  this  period  of  time,  to  go  through  this  relatively 
quickly,  if  I  could,  Mr.  Chairman,  because  I  have  a  lot  of  questions. 
Mr.  Moody.  I  dedicate  the  agents  to  organized  criminal  groups 
involved  in  the  totality  of  their  violations  or  their  activities.  That 
is  what  I  am  interested  in. 

Mr.  TORRICELLI.  Well,  let's  then,  to  sum  up  then,  before  I  move 
on — the  number  who  are  dedicated  to  organized  crime  in  Indian 
gaming  is  essentially  none,  and  you  were  not  contradicting  my 
point  that  during  the  course  of  the  year,  even  those  who  deal  tan- 


157 

gentially  with  the  issue  may  not  visit  Indian  gaming  at  all  while, 
in  fact,  those  other  casinos  established  under  laws  in  New  Jersey 
and  Nevada  have  hundreds  of  agents. 

If  you  would  like  to  quarrel  with  that,  I  would  be  glad  to  have 
you  do  so. 

Mr,  Moody.  No,  sir,  that  is  not  quite  accurate.  I  don't  necessarily 
visit  any  Nevada  or  New  Jersey  gaming  casino  unless  I  am  looking 
at  organized  crime  involvement. 

Mr.  TORRICELLI.  No,  of  course,  but  we  have  taken  care  of  that 
problem  by  having  985  people  who  do. 

Mr.  Moody.  Those  are  State  regulators,  yes,  sir. 

Mr.  TORRICELLI.  Let  me  move  on,  if  I  could. 

Mr.  Miller.  Would  the  gentleman  yield? 

Mr.  TORRICELLL  Yes. 

Mr.  Miller.  Then  you  have  to  compare  that  to,  in  many  reserva- 
tions and  the  States  all  have  their  people  who  visit  the  reserva- 
tions and  ongoing  surveillance  from  local  law  enforcement,  from 
tribal  law  enforcement — okay,  so  there  is  an  overlay. 

Mr.  TORRICELLI.  Yes,  that  is  a  fair  point. 

How  many  of  the  Indian  gaming  authorities  of  the  Federal  Grov- 
emment — how  many  inspectors  do  they  have? 

Mr.  Moody.  I  don't  know,  sir. 

Mr.  TORRICELLI.  Twenty  seven.  So  the  combined  resources  of  the 
FBI  and  the  Indian  gaming  authorities  are  27. 

Let  me  move  on,  if  I  could. 

The  inspector  general's  report  concluded,  on  page  2,  "Indian 
tribes  may  be  losing  significant  income  because  of  fraud  or  abuse 
in  an  industry  that  is  generating  revenues  of  $2  billion  a  year  on 
Indian  lands."  Indeed,  the  report  concludes  that  generally  the  fraud 
could  be  in  the  millions  of  dollars. 

Since  this  report  was  issued,  has  there  been  a  new  dedication  of 
resources  or  an  investigation  to  find  the  veracity  of  the  inspector 
general's  report? 

Mr.  Moody,  Not  in  organized  crime  because  I  don't  believe  that 
it  states  anything  in  there  about  organized  crime  involvement  in 
that. 

Mr.  TORRICELLI.  No,  but  I  am  dealing  generally  with  the  ques- 
tion of  fraud  or  abuse.  This  report  obviously  raises  some  serious 
questions.  I  am  concerned  about  the  FBI's  reaction  to  it  and  in  see- 
ing whether  or  not  there  is  veracity  in  these  claims. 

Mr.  Moody,  I  don't  know,  sir,  and  it  depends  also  on  the  individ- 
ual reservation  whether  we  are  even  investigating  there, 

Mr.  TORRICELLI.  Mr.  Chairman,  I  will  be  very  brief,  but,  Mr. 
Urgenson,  tell  me,  of  the  124  Indian  casinos  operating,  how  many 
of  them  have  arrangements  with  the  IRS  similar  to  New  Jersey  or 
Nevada,  or  indeed  the  Indian  casino  in  Connecticut,  with  regular 
operations  to  protect  against  laundering? 

Mr.  Urgenson.  I  don't  know  the  answer  to  that  question,  Con- 
gressman, as  to  whether  any  of  them  have. 

Mr.  TORRICELLI.  You  are  not  aware  that  any  of  them  have  simi- 
lar arrangements? 

Mr.  Urgenson,  One  way  or  the  other,  I  am  just  not  aware  of  it. 

Mr.  TORRICELLI.  I  see. 


84-760  O  -  94  -  6 


158 

What  is  important  to  me  is  that  your  testimony  here,  particularly 
you,  Mr.  Moody,  has  enormous  credibility  with  this  committee  and 
with  this  Congress  and  in  many  wavs  will  influence  the  judgment 
of  individual  Members  whether  to  proceed,  and  while  I  think  we 
should  all  be  appreciative  of  your  presence  today  and  the  expertise 
that  you  add,  that  level  of  expertise  is  extremely  important  for  us 
to  make  judgments. 

It  is  obviously  my  own  conclusion  that  we  can  neither  affirma- 
tively discount  or  account  for  the  level  of  organized  crime  involve- 
ment, because  I  don't  believe  indeed  anybody  actually  knows. 

For  example,  in  the  Seminole  case  in  Florida,  the  Department  of 
the  Interior  concluded  that  it  could  not  proceed  with  an  investiga- 
tion for  lack  of  resources.  Was  that  indeed  followed  by  an  FBI  in- 
vestigation in  the  case  of  the  Seminoles? 

Mr.  Moody.  It  is  my  understanding  that  allegations  concerning 
the  Seminole  case  in  Florida  involved  an  individual  by  the  name 
of  Anthony  Accetturo  which,  for  your  information,  he  was  just  con- 
victed of  racketeering  charges  in  New  Jersey,  not  necessarily  hav- 
ing to  do  with  the  Indian  casino  in  Florida, 

Mr.  TORRICELLI.  Yes. 

Mr.  Moody.  So  we  try  to  take  these  individuals  out  when  we 

Mr.  TORRICELLI.  Mr.  Moody,  lest  you  think  that  somehow  you 
have  raised  a  point  here  that  would  deflect  my  interest,  it  is  your 
point  that  is  exactly  my  interest. 

I  know  where  these  people  are  coming  from,  because  I  live  with 
them  every  day  in  my  State.  I  know  who  they  are,  and  I  know 
what  is  taking  place  here.  That  is  why  I  am  asking  the  question. 

Now,  before  I  conclude,  I  simply  want  for  the  purpose  of  the 
members  of  the  committee  to  understand  the  level  of  FBI  involve- 
ment in  this  investigation  to  date.  Could  you  therefore  tell  me,  as 
a  witness  coming  before  this  committee,  what  you  know  about  the 
sourcing  of  buying  slot  machines  with  the  Mohawk  Tribe  in  New 
York? 

Mr.  Moody.  I  don't  know  anything  about  the  sourcing  of  slot  ma- 
chines for  the  Mohawk. 

Mr.  TORRICELLI.  I  see.  They  were  purchased  by  associates  of 
John  Grotti. 

Could  you  tell  me  anything  about  Robert  Sabes? 

Mr.  Moody.  No,  sir,  I  don't  know  anything 

Mr.  TORRICELLI.  Mr.  Sabes  is  involved  with  the  Lucchese  crime 
family  by  a  contractual  basis  in  that  he  rents  real  estate  to  them 
and  is  involved  with  Indian  tribes  in  Minnesota. 

Finally,  could  you  tell  me  about  the  FBI  investigation  concerning 
Mr.  Alvarez? 

Mr.  Moody.  I  can't  tell  you  about  any  investigation. 

Mr.  TORRICELLI.  Well,  Mr.  Moody,  I  could.  Mr.  Alvarez  was  mur- 
dered after  he  refused  to  engage  in  discussions  on  Indian  gaming 
contracts.  He  £ind  two  associates  were  found  dead,  according  to  a 
report  of  the  attorney  general's  office  of  the  State  of  California. 

Mr.  Moody,  with  all  due  respect,  I  appreciate  the  fact  that  you 
are  here  to  help  with  this  questioning,  but  indeed  isn't  it  fair  that 
if  this  were  a  court  of  law  and  you  were  to  have  to  be  sworn  in 
as  an  expert  witness  on  Indian  gaming  and  the  problems  of  corrup- 


159 

tion,  it  is  doubtful  that  in  fact  you  could  be  an  expert  witness  on 
that  issue? 

Mr,  Moody.  On  Indian  gaming,  that  may  be  true,  but  on  orga- 
nized crime  I  have  been  qualified  in  several  courts  as  being  an  ex- 
pert witness. 

Mr.  TORRICELLI.  Of  course,  but  we  are  not  talking  about  the  New 
York  waterfront,  we  are  talking  about  Indian  gaming. 

I  have  no  further  questions,  Mr.  Chairman.  Thank  you  for  the 
time. 

Mr.  Richardson.  I  have  to  ask  Mr.  Moody  just  one  question,  be- 
cause this  has  been,  as  the  gentleman  said,  a  very  important  panel. 

You  mentioned  that  the  FBI  has  fewer  than  five  open  investiga- 
tions of  organized  crime  in  Indian  gaming. 

Mr.  Moody.  Yes,  sir,  I  have  in  the  past. 

Mr.  Richardson.  Now  how  does  that  compare  with  any  inves- 
tigations you  are  undertaking  in  New  Jersey  or  Nevada? 

Mr.  Moody.  We  have  more  investigations  in  New  Jersey  and  Ne- 
vada, but  as  far  as  the  casinos  go,  we  have  less  than  five  investiga- 
tions in  New  Jersey  or  Nevada  involving  the  casinos. 

Mr.  Richardson.  Now,  the  Rincon  reservation  case 

Mr.  Moody.  Yes,  sir. 

Mr.  Richardson.  Who  tipped  you  off  on  that? 

Mr.  Moody.  Our  intelligence  base,  sir. 

Mr.  Richardson.  Well,  I  am  on  the  Intelligence  Committee;  you 
can  tell  me. 

[Laughter.] 

Mr.  Richardson.  All  right.  Let  me  thank 

Mr.  Miller.  Mr.  Chairman,  if  I  might  have  a  round  of  questions. 

Mr.  Richardson.  Yes. 

Mr.  Miller.  Mr.  Moody,  I  don't  quite  get  what  Mr.  Torricelli's 
point  was,  but  let  me  go  back  and  reconstruct  what  took  place  here. 
Your  testimony  is — and  correct  me  if  I  am  wrong — is  essentially 
that  your  unit  has  not  found  any  significant  problem  with  respect 
to  organized  crime  within  Indian  gaming.  Is  that  correct? 

Mr.  Moody.  That  is  correct. 

Mr.  Miller.  Your  testimony  is  not  that  there  have  not  been  inci- 
dents where  organized  crime  has  tried  to  take  advantage  one  way 
or  another  within  the  Indian  gaming  industry,  that  there  are  epi- 
sodes, the  Rincon  Tribe,  others  where  that  has  happened.  In  one 
case,  that  has  been  a  successful  prosecution. 

Mr.  Moody.  That  is  correct. 

Mr.  Miller.  Your  expertise  here  is  as  to  the  activities  of  orga- 
nized crime,  correct? 

Mr.  Moody.  That  is  correct. 

Mr.  Miller.  And  looking  at  it  from  the  question  of  whether  or 
not — what  is  the  extent  of  the  involvement  of  organized  crime, 
again,  it  is  that  there  is  no  significant  activity  here  to  date  that 
you  can  document. 

Mr.  Moody.  That  is  correct. 

Mr.  Miller.  By  the  same  token,  the  issue  of  whether  or  not  you 
dedicate  people  to  New  Jersey  casinos  or  Nevada  casinos  or  Indian 
casinos  has  no  bearing  on  that  issue  either,  does  it? 

Mr.  Moody.  No,  sir.  I  dedicate  my  manpower  to  the  La  Cosa 
Nostra  family. 


160 

Mr.  Miller.  I  would  think  that  in  America  when  most  people 
think  about  organized  crimes  and  the  problems  that  confront  them 
as  taxpayers,  Indian  casinos  would  be  fairly  far  down  on  the  list 
when  they  consider  all  of  the  problems  that  we  have  with  illicit 
drug  involvement,  with  what  happened  in  some  of  our  banks,  with 
what  happens  with  illicit  gun  trafficking.  I  would  assume  you  are 
being  prudent  when  you  are  not  dedicating  people  to  hang  out  in 
Indian  casinos  to  see  if  they  can  spot  organized  crime. 

Mr.  Moody.  I  hope  I  am  being  prudent.  Our  target  is  the  La 
Cosa  Nostra  family.  We  are  trying  to  destroy  them,  and  that  is 
what  we  are  emphasizing,  and  we  will  destroy  them  on  any  identi- 
fied illegal  activity  that  we  can  come  up  with. 

Mr.  Miller.  So  if  your  involvement  in  this  comes  through  the  or- 
ganized crime  networks,  you  follow  those  leads  wherever  they  take 
you.  They  could  take  you  to  the  race  tracks,  to  a  savings  and  loan, 
to  a  bank,  to  a  politician's  office;  they  could  take  you  anywhere, 
right? 
Mr.  Moody.  That  is  correct,  sir. 

Mr.  Miller.  You  don't  try  to  come  around  and  anticipate  where 
they  might  show  up  on  any  given  evening. 
Mr.  Moody.  No,  sir. 

Mr.  Miller.  I  think  it  is  very  important,  Mr.  Chairman,  that  we 
delineate  that  issue. 

Now  with  regard  to  the  second  issue,  whether  or  not  there  has 
been  illegal  activity  within  the  Indian  gaming  industry,  whether 
employees  have  taken  money  out  the  back  door,  whether  dealers 
have  skimmed,  all  of  the  things  that  we  know  go  on  in  this  indus- 
try across  the  board,  people  are  dismissed  on  a  regular  basis  within 
this  industry  for  some  impropriety  with  respect  to  the  security  of 
the  cash  flow.  That  does  not  trigger  on  any  level  FBI  involvement, 
does  it? 

Mr.  Moody.  It  can  possibly  trigger  our  involvement  if  we  have 
responsibility  for  the  Indian  reservation,  and  it  may  be  referred  to 
us. 

Mr.  Miller.  But  in  the  general  gaming  industry  that  is  not  the 
case.  It  may  trigger  the  Nevada  Gaming  Commission,  the  Indian 
Gaming  Commission,  it  may  trigger  the  IRS  if  this  person  shows 
up  that  he  is  signing  for  all  these  $10,000  transactions;  it  may  trig- 
ger a  lot  of  things;  but  that  doesn't  necessarily  rise  to  the  occur- 
rence of  an — I  think  it  is  very  important  here  that  we  understand 
that,  that  we  not  try  to  give  the  illusion  that  something  exists  here 
that  factually  does  not  exist  to  date  as  we  know  it,  given  the  sur- 
veillance and  the  involvement  of  these  agencies  that  are  respon- 
sible for  it.  That  does  not  give  Indian  gaming  or  non-Indian  gaming 
a  clean  slate  with  the  involvement  of  their — with  State  regulatory 
agencies,  with  Federal  agencies,  with  their  employees,  their  man- 
agement, and  others  who  are  involved  in  this  process.  But  that  is 
true  of  the  hardware  industry  too,  and,  I  suspect,  the  grocery  store 
industry,  that  people  are  running  away  with  other  people's  monies 
all  the  time,  and  we  ought  to  just  keep  that  in  perspective,  Mr. 
Chairman. 

I  was  very  concerned  that  the  suggestion  was,  somehow,  because 
an  FBI  agent  wasn't  on  the  spot,  that  that  suggested  either  lack 


161 

of  enforcement  or  the  misapplication  of  Federal  manpowers  and  re- 
sources. Thank  you. 

Mr.  TORRICELLI.  Mr.  Chairman,  would  you  yield  for  a  moment? 

Mr.  Miller.  Sure. 

Mr.  TORRICELLL  Perhaps  we  can  conclude  this  round,  having  dis- 
agreed on  the  past,  we  could  agree  on  the  future. 

You  were  quoted  in  the  Boston  Globe  last  week  as  saying,  Mr. 
Moody — and  I  quote — "I  don't  believe  that  organized  crime  is  just 
sitting  back  and  saying,  "Why  would  we  want  to  get  involved  in 
that?'  I  say  they  are  going  to  be  looking  at  every  one  of  them  and 
tr3dng  to  identify  certain  areas  to  get  into." 

Therefore,  Mr.  Moody,  you  and  I  may  dispute  what  has  happened 
to  date,  but  indeed  if  you  will  affirm  that  that  is  your  quote,  I  take 
it  we  can  agree  that  in  the  future  organized  crime  is  going  to  be 
looking  at  Indian  gaming  as  it  is  now  constituted,  it  is  something 
on  which  we  need  to  be  vigilant  and  to  address  changes  in  the  law, 
if  indeed  that  is  possible.  Would  that  be  a  fair  conclusion  for  this 
round  of  testimony? 

Mr.  Moody.  I  don't  know  about  that  quote;  I  never  saw  it.  But 
this  is  my  opinion  of  organized  crime,  sir 

Mr.  TORRICELLL  Mr.  Moody 

Mr.  Moody.  If  you  will  give  me  one  second 

Mr.  TORRICELLL  My  concern  would  be,  this  is  about  the  third 
time  we  have  raised  a  newspaper  quote  with  you  here  today.  I  live 
in  politics,  so  I  understand  what  it  is  like  to  be  misquoted,  but  you 
have  a  unique  propensity.  Did  you  not  make  this  quote  in  the  Bos- 
ton Globe  last  week? 

Mr.  Moody.  I  don't  even  recall  talking  to  the  Boston  Globe,  sir; 
I  really  don't. 

Here's  the  way  I  look  at  organized  crime.  It  is  made  up  of  a  lot 
of  individual  criminal  entrepreneurs,  and  any  time  you  have  any 
industry  or  any  way  that  can  generate  money,  especially  one  with 
a  lot  of  cash,  you  are  always  going  to  have  certain  individuals  in- 
volved in  that,  that  want  to  try  to  penetrate  that  activity. 

So  if  you  have  any  t3rpe  of  gaming  operation,  there  is  always  the 
potential  that  you  will  have  somebody  in  organized  crime  trying  to 
penetrate  that,  and  that  is  why  my  recommendation  here  is  that 
strong  regulatory  agencies  be  set  up  to  prevent  that. 

Mr.  TORRICELLL  Very  good,  Mr.  Moody.  Whether  or  not  you  af- 
firm the  quote,  you  certainly  affirm  the  thought,  and  for  that  I  am 
appreciative.  Thank  you. 

Mr.  Richardson.  I  want  to  thank  this  panel.  You  have  been  very 
patient,  and  you  have  provided  a  very  interesting  component  for 
this  hearing. 

We  now  would  move  on  to  our  third  panel:  Our  colleague  from 
New  Jersey,  the  Honorable  Robert  Torricelli,  U.S.  Representative, 
New  Jersey  Ninth  District,  and  Mr.  Donald  Trump,  chairman  and 
president.  Trump  Organization,  from  New  York  City. 

I  want  to  welcome  our  witnesses  and  would  ask  them  to  step  for- 
ward to  the  panel,  and  I  would  defer  to  our  colleague  from  New 
Jersey  to  introduce  his  colleague  or  to  provide  us  with  the  first 
round  of  testimony.  Again,  we  have  a  very  key  issue  here  in  this 
committee,  and  we  heard  Senator  Inouye  talk  about  an  October  19 
decision  on  what  the  other  body  is  doing. 


162 

I  want  to  thank  our  colleague  from  New  Jersey,  and  I  would  ask 
him  to  please  proceed. 

STATEMENT  OF  HON.  ROBERT  G.  TORRICELLI,  A  REPRESENT- 
ATIVE IN  CONGRESS  FROM  THE  STATE  OF  NEW  JERSEY 

Mr.  TORRICELLI.  Thank  you,  Mr.  Chairman,  very  much,  and 
thank  you  for  this  opportunity. 

I  am  before  you  today  to  share  both  my  thoughts  with  you  on  the 
question  of  Indian  gaming,  an  industry  important  to  my  State,  the 
ramifications  of  its  problems,  I  think  affecting  all  of  us,  and  out  of 
concern  that  you  would  not  recognize  your  next  witness,  I  wanted 
to  introduce  him  to  you  this  morning. 

Mr.  Chairman,  for  almost  a  century  my  State  and  many  areas 
of  this  country  have  been  plagued  with  the  scourge  of  organized 
crime.  It  has  been  a  parasite  on  businesses  that  have  legitimately 
attempted  to  operate  in  my  State  and,  indeed,  been  an  embarrass- 
ment to  many  parts  of  our  community. 

After  extraordinary  efforts  by  the  Federal  Government  and  sig- 
nificant changes  in  the  law  in  recent  years,  by  any  accounts,  we  are 
close  to  breaking  the  back  of  organized  crime.  But  an  extraordinary 
irony  is  arising.  Just  as  we  find  family  after  family  that  are  being 
broken,  it  is  my  own  judgment  that  a  drowning  Mafia  is  being 
tossed  a  lifeline  for  its  own  survival.  Unregulated  casino  gaming 
without  provisions  for  the  protection  of  the  transfer  of  cash,  with- 
out provisions  to  do  background  checks  or  investigations,  has 
opened  an  enormous  door  for  the  survival  of  organized  crime  as  we 
know  it. 

Indeed,  a  multi-billion-dollar  operation  is  already  operating  in 
this  country.  Without  question,  some  of  the  175  operations  in  26 
States  are  already  compromised.  It  can  be  no  surprise  that  22  seri- 
ous allegations  have  already  been  made  concerning  some  of  these 
operations. 

Mr.  Chairman,  I  think  just  for  a  moment  it  bears  citing  what 
some  of  these  allegations  are.  I  will  not  attempt  to  name  most  of 
them,  but  I  will  mention  only  a  few. 

The  State  of  California,  Barona  Rancheria,  Stewart  Siegel  admit- 
ted to  being  a  front  for  orgsinized  crime.  He  had  for  a  while  headed 
the  tribe's  management  firm. 

Cabazon  Indian  Tribe  in  California.  After  tribal  Vice  President 
Fred  Alvarez  began  complaining  of  money  skimming,  he  mysteri- 
ously was  found  dead  with  two  friends. 

The  Rincon  Indian  Reservation  in  San  Diego  County,  Sam 
"Wings"  Carlisi  and  eight  other  organized  crime  figures  were  in- 
dicted in  a  15-count  indictment  comprised  of  felony  charges. 

Jackson  Rancheria:  Anthony  "Tumac"  Accetturo  managed  a  bingo 
hall  in  1985.  He  recently  was  convicted  as  being  head  of  the 
Lucchese  organized  crime  family. 

The  State  of  Minnesota,  the  White  Earth  Tribe,  Angelo  Medure, 
an  alleged  associate  of  the  Pittsburgh  organized  crime  figure,  Car- 
men Ricci,  an  alleged  associate  of  New  Jersey's  Scarfo,  who  indeed 
had  attempted  to  penetrate  New  Jersey  casino  gaming  in  previous 
years,  has  raised  an  investigation  by  law  enforcement  personnel. 


163 

In  the  State  of  New  York,  as  I  cited  earlier,  in  the  Mohawk 
Tribe,  an  associate  of  John  Grotti  was  arrested  for  shipping  slot  ma- 
chines to  the  reservations. 

And  in  my  own  State  of  New  Jersey,  the  Ramapough  Indians  em- 
ployed one  Robert  Frank  as  a  consultant.  He  was  later  convicted, 
along  with  Mr.  Accetturo,  of  racketeering  and  extortion,  of  being 
the  head  of  New  Jersey's  Lucchese  crime  family. 

Not  anecdotes,  Mr.  Chairman,  22  States,  22  instances,  where  the 
threat  of  organized  crime  is  not  a  theory,  it  is  not  somebody's  con- 
spiracy, it  is  a  reality  of  everyday  life,  and  the  question  is,  what 
is  this  committee  and  what  is  Congress  going  to  do  to  deal  with  the 
problem? 

Forty-nine  governors  and,  indeed,  the  President  of  the  United 
States  have  all  cited  the  current  state  of  affairs  cannot  be  allowed 
to  continue.  This  committee  heard  previously  from  Senator  Inouye 
claiming  that  negotiations  with  the  governors  would  solve  this 
problem,  but  indeed  a  letter  from  the  Grovernors  Association  that 
Senator  Inouye  has  received  claims  that  those  negotiations  are  not 
adequate  and  they  are  not  coming  to  a  resolution  and  that  indeed 
this  Congress  must  act. 

Mr.  Chairman,  I  know  the  good  intentions  of  this  Congress  and 
of  this  committee  in  trying  to  open  opportunity  for  Indian  Ameri- 
cans. I  do  not  come  before  you  claiming  that  there  are  not  problems 
with  Indian  Americans.  They  are  profound,  and  they  are  an  embar- 
rassment to  each  and  every  American.  We  have  violated  our  word, 
we  have  not  respected  the  most  basic  human  rights  of  our  Native 
Americans. 

But  this  is  no  answer.  We  are  doing  no  favor  to  Indian  American 
culture  by  destroying  it  by  opening  up  Indian  gaming  as  a  pro- 
tected industry  for  them.  We  are  destroying  their  culture,  we  are 
destroying  their  traditional  leadership,  by  inviting  corruption  in  an 
industry  without  oversight,  without  basic  controls  for  money  laun- 
dering. 

Finally,  Mr.  Chairman,  I  make  no  apologies  for  the  fact  that, 
aside  from  this  being  a  concern  for  a  variety  of  reasons  with  orga- 
nized crime,  with  a  concern  for  the  destruction  of  Indian  culture, 
it  is  also  an  enormous  concern  for  my  State  of  New  Jersey. 

Six  percent  of  the  revenues  of  my  State  come  from  legitimate  ca- 
sino gaming.  If  indeed  Americans,  every  American,  comes  to  believe 
that  casino  gaming  in  this  country  is  compromised,  that  it  is  not 
legitimate,  that  they  cannot  be  treated  fairly  at  their  tables,  then 
indeed  not  only  will  Indian  gaming  suffer  but  Las  Vegas  and  Atlan- 
tic City,  where  we  have  made  real  and  substantial  efforts  to  ensure 
the  integrity  of  the  industry,  will  also  be  compromised,  and  we  will 
lose  the  revenue,  and  so  will  the  senior  citizens,  and  the  institu- 
tions that  are  established  for  the  disadvantaged  that  profit  from 
those  taxes  also  suffer. 

Mr.  Chairman,  I  would  at  this  point  like  to  jdeld  and  introduce 
Mr.  DonEild  Trump.  The  Trump  Organization  is  by  far  the  largest 
investor  in  Atlantic  City.  It  has  invested  not  simply  millions  but  in- 
deed in  excess  of  a  billion  dollars  in  the  operations  of  legitimate  ca- 
sino gaming  in  Atlantic  City. 

This  much  I  can  say  about  Mr.  Trump  will  distinguish  him  from 
what  you  have  heard  today  about  Indian  gaming.  The  State  of  New 


164 

Jersey  knows  Mr.  Trump.  He  chose  to  do  business  in  Atlantic  City. 
So  we  know  who  invests  in  his  companies.  We  know  who  he  buys 
his  supplies  from.  We  know  who  works  for  him.  We  know  who 
walks  in  his  casinos  with  cash,  where  it  came  from,  and  where  it 
went.  We  know  a  lot  about  Mr.  Trump,  and  we  know  a  lot  about 
everybody  who  attempted  to  come  to  Atlantic  City. 

From  established  organizations  like  the  Hilton  organization 
through  many  lesser  applicants,  we  rejected  people  because  they 
didn't  meet  our  standards,  and  today  we  spend  not  simply  millions 
but  many  millions  of  dollars  not  simply  with  a  few  inspectors  but 
hundreds  of  inspectors,  to  make  sure  that  the  same  people  who  I 
cited  as  being  involved  in  organized  crime  in  Indian  casinos 
throughout  this  country  will  not  be  in  the  State  of  New  Jersey.  We 
chased  them  out,  we  kept  them  out,  they  are  out,  and  because  they 
are  out  of  the  State  of  New  Jersey,  they  are  seeking  to  take  advan- 
tage of  Native  Americans  who  want  opportunity  but  who  will  be 
victimized  if  we  fail  to  protect  them. 

I  do  not  want  to  see  discrimination.  I  want  no  part  of  denying 
opportunities  to  Native  Americans.  I  come  today  not  because  but 
in  spite  of  those  who  would  restrict  their  opportunities.  It  is  simply 
a  question  of  assuring  that  they  are  safeguarded,  like  Atlantic  City 
and  Las  Vegas  are  safeguarded  and  indeed  that  we  all  are  pro- 
tected against  these  elements  which  we  are  so  close  to  defeating  in 
our  country. 

With  that,  Mr.  Chairman,  if  I  could,  I  would  like  to  yield  to  Mr. 
Trump. 

[Prepared  statement  of  Mr.  Torricelli  follows:] 


165 


STATEMENT  OF  REP.  ROBERT  G.  TORRICELLI 

BEFORE  THE  HOUSE  SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

OCTOBER  5,  1993 

I'd  like  to  thank  Chairman  Richardson  for  holding  today's 
hearing  and  offering  me  the  opportunity  to  testify. 

It  would  be  difficult  to  overstate  the  importance  of  today's 
hearing  not  only  to  my  home  state  of  New  Jersey,  but  to  the  country 
as  a  whole.  For  what  we  have  seen  over  the  past  five  years  --  the 
proliferation  of  over  175  commercial  Native  American  gaming 
establishments  in  26  states  --  has  enormous  consequences  to  our 
social  fabric  and  our  law  enforcement  capabilities. 

What  we  have  seen  is  the  spread  of  de- regulated  casino  gaming 
across  the  country  without  the  citizens  of  the  United  States  or 
their  elected  representatives  ever  having  made  the  decision  to  let 
that  happen.  As  a  representative  from  one  state  that  does  allow 
high  stakes  casinos,  I  believe  that  is  the  wrong  way  to  proceed. 

Gambling  in  New  Jersey  was  a  very  difficult  public  policy 
decision.  It  was  made  only  after  careful  consideration  by  the 
people  of  New  Jersey  and  their  elected  officials,  and  it  was 
accompanied  by  an  amendment  to  the  state's  Constitution.  I  believe 
that  decisions  to  allow  casino  gaming  on  Native  American  lands 
should  undergo  the  same  public  scrutiny  and  the  same  input  from 
affected  communities. 

But  the  purpose  of  today's  hearing  is  not  to  discuss  whether 
we  should  allow  the  further  proliferation  of  these  casinos.  The 
purpose,  instead,  is  to  discuss  whether  these  casinos  are  properly 
regulated  and  whether  they  pose  an  irresistible  invitation  to 
organized  crime. 

I  believe  that  if  one  compares  the  regulation  of  casino  gaming 
in  New  Jersey  with  the  regulation  of  tribal  casinos,  there  is  great 
cause  for  concern. 

Atlantic  City's  casinos  operate  under  the  most  comprehensive 
system  of  gaming  regulations  in  the  world.  In  developing  its 
regulations.  New  Jersey  officials  sought  considerable  input  from 
their  counterparts  in  Nevada.  We  took  what  worked  best  in  Las 
Vegas  and  adopted  it  for  our  own,  and  we  went  above  and  beyond  Las 
Vegas'  regulations  where  we  thought  it  was  necessary. 

New  Jersey  spends  $60  million  each  year  to  fund  two  government 
agencies  that  enforce  its  regulations.  Virtually  all  aspects  of 
casino  operations,  from  who  can  be  involved  to  the  specific 
dimensions  of  a  chip,  are  strictly  enforced. 


166 


In  Atlantic  City,  background  checks  are  conducted  on  any 
individual  who  handles  any  money  or  who  is  involved  directly  in  the 
games.  These  checks  are  so  thorough  that  the  owners  of  the  Hilton 
Hotel  chain  were  originally  turned  down  for  a  license  because  the 
company  had  some  dealings  that  were  not  sufficiently  explained  to 
state  regulators. 

New  Jersey's  casinos  are  also  subject  to  the  Bank  Secrecy  Act, 
which  requires  meticulous  reporting  and  recordkeeping  of  cash 
transactions.  In  fact,  every  single  dollar  is  accounted  for  and 
reported  back  to  the  state. 

Tribal  casinos,  on  the  other  hand,  are  regulated  by  the  tribes 
themselves.  The  Federal  Government  is  severely  limited  in  the 
amount  of  oversight  it  can  provide,  and  the  states  can  only  monitor 
the  games  subject  to  conditions  laid  out  by  a  tribal-state  compact. 

The  federal  Indian  Gaming  Commission  does  have  oversight 
responsibilities  for  Class  II  gaming,  such  as  bingo.  But  the 
Commission  has  a  $3  million  budget  and  a  staff  of  24  to  oversee 
more  than  100  class  II  Indian  gaming  operations  across  the  country. 
By  contrast.  New  Jersey  gaming  regulators,  who  have  responsibility 
for  12  gaming  operations  in  one  city,  have  a  $60  million  budget  and 
985  employees. 

Operators  of  tribal  casinos  are  hired  by  the  tribes 
themselves,  and  often  undergo  no  background  investigations. 
To  illustrate  how  inadequate  background  checks  can  be,  an 
individual  who  headed  the  management  firm  for  gaming  operations  on 
the  Barona  Rancheria  reseirvation  in  San  Diego  was  twice  turned  down 
for  a  license  by  the  Nevada  Gaming  Control  Board. 

Furthermore,  these  casinos  are  not  subject  to  the  Bank  Secrecy 
Act.  The  danger  of  this  situation  has  attracted  the  attention  of 
Treasury  Secretary  Bentsen,  who  has  stated  support  for  making 
tribal  casinos  subject  to  the  Act,  and  who  wrote  recently  that 
"without  adequate  recordkeeping,  internal  controls,  and  currency 
reporting,  Indian  gaming  has. . .potential  to  be  an  attractive  target 
for  money  laundering." 

We  are  aiL.ady  beginning  to  see  the  negative  coi.-equences  of 
this  loose  regulation. 

*  In  a  report  issued  last  December,  the  Inspector  General  for 
the  U.S.  Interior  Department  said  gaming  revenues  of  over  $12 
million  may  have  been  improperly  diverted  from  tribes  to 
operators  and  suppliers,  principally  because  of  theft  and 
mismanagement  by  contracted  operators  of  gaming 
establishments.  In  last  Wednesday's  Boston  Globe,  the  author 
of  that  report  stated  that  "those  places  are  sitting  ducks  for 
fraud. " 


167 


*  On  the  Rincon  Reservation  outside  of  San  Diego,  three 
reputed  mob  leaders  from  Chicago  and  two  local  men  were 
convicted  of  conspiracy  to  launder  money  and  defraud  the 
tribe. 

*  There  have  been  repeated  allegations  of  ties  between 
the  Seminole  Indian  Tribe's  bingo  operation  in  Florida 
and  organized  crime.  Both  the  Interior  Department  and 
the  Attorney  General  of  Florida  have  begun 
investigations.  And  the  FBI  recently  reported  that  ties 
do  indeed  exist. 

*  The  Cabazon  tribe  in  California  hired  a  member  of  a 
local  crime  syndicate  to  run  its  casino.  A  tribal 
official  who  accused  the  manager  of  skimming  profits  was 
forced  out  of  office  and  found  dead  two  months  later. 
While  the  case  has  not  yet  been  solved,  investigators 
believe  that  the  murder  was  mob  related. 

*  New  Jersey's  Ramapough  Mountain  Tribe  signed  a  contract  with 
the  Rory  Management  Company  (RMC) .  In  return  for  spending 
millions  of  dollars  on  lobbying  efforts  to  secure  federal 
recognition  for  the  tribe,  RMC  would  be  allowed  to  co-own  and 
operate  a  high  stakes  bingo  hall  and  casino  on  tribal  land. 
Robert  Frank,  RMC's  president,  was  sued  less  than  a  year  later 
for  $6  million  for  alleged  fraud  and  embezzlement  scheme  at  a 
California  Indian  bingo  hall.  He  was  subsequently  the  subject 
of  a  criminal  investigation  for  fraud,  interstate  money 
laundering,  and  possible  ties  to  organized  crime. 

*  The  FBI  is  currently  investigating  Angelo  Medure,  who 
manages  a  casino  for  Minnesota's  White  Earth  Band  of  Chippewa 
Indians.  Medure  is  a  business  associate  of  Henry  Zottola,  who 
works  for  the  Genovese  crime  family.  It  is  suspected  that 
these  men  are  laundering  money  for  that  crime  family. 

To  accompany  my  written  testimony,  I  am  submitting  for  the 
record  22  specific  examples  of  organized  crime  infiltration  or 
corruption  in  tribal  gaining  that  have  been  reported  in  the  media. 

Some  will  say  that  these  are  isolated  instances,  or  that  they 
are  only  rumor  and  hearsay.  But  the  fact  is  that  in  the  five  years 
since  passage  of  IGRA,  tribal  casinoshave  opened  in  26  states,  and 
reports  of  corruption  or  ties  to  organized  crime  have  already 
surfaced  in  10  of  them. 

Anyone  who  honestly  examines  the  manner  in  which  tribal 
casinos  are  currently  managed  and  regulated  --  and  the  ability  of 
organized  crime  networks  to  exploit  this  situation  --  can  only  come 
to  the  conclusion  that  what  we  are  seeing  today  is  the  tip  of  the 
iceberg.  In  fact,  I  am  willing  to  submit  that  the  only  reason  we 
have  not  seen  even  more  evidence  of  ties  between  organized  crime 
and  tribal  casinos  is  that  no  Federal  regulatory  apparatus  exists 
to  police  it  or  look  into  it. 


168 


I  have  introduced  legislation  --  HR  2287,  the  Gaming  Integrity 
and  State  Law  Enforcement  Act  --  that  will  address  these  problems. 
Similar  legislation  has  been  introduced  by  Senators  Harry  Reid  and 
Richard  Bryan  in  the  other  body. 

*  HR  2287  will  give  states  the  right  to  reject  forms  of  gaming 
on  tribal  lands  that  are  not  allowed  elsewhere  in  the  state 
and  give  states  that  do  allow  tribal  gaming  more  power  to 
negotiate  regulatory  controls  in  gaming  compacts. 

*  It  will  make  it  the  responsibility  of  the  Attorney  General 
of  the  United  States  to  ensure  that  adequate  background  checks 
are  conducted  on  individuals  affiliated  with  tribal  casinos 
before  those  individuals  begin  work  at  a  casino. 

*  It  will  also  address  Secretary  Bentsen's  concerns  by 
making  Indian  gaming  establishments  subject  to  the  same 
financial  reporting  requirements  as  other  businesses  in 
the  United  States. 

Some  have  already  branded  my  legislation  as  aji  effort  simply 
to  protect  the  economic  interests  of  New  Jersey  and  Nevada.  I  will 
not  deny  that  the  economic  health  of  Atlantic  City's  casinos  is 
crucial  to  the  economic  health  of  New  Jersey,  and  that  I  have  an 
interest  in  looking  out  for  my  home  state.  But  I  would  also  point 
to  cosponsorship  of  this  legislation  by  Members  and  Senators  from 
California,  Wyoming,  Florida,  Arizona,  Kentucky,  Wisccns:n,  New 
York  and  New  Hampshire. 

Those  with  open  minds  will  also  see  that  this  legislation 
comes  from  people  who  know  gaming,  and  who  see  better  than  anyone 
else  the  dangers  posed  by  loosely  regulated  casinos.  We  know  that 
Native  Americans  themselves  want  to  prevent  criminal  elements  from 
infiltrating  their  operations.  We  also  kjiow  that  gaming  is  the 
most  productive  engine  of  economic  development  that  many  tribes 
have  ever  experienced.  We're  simply  trying  to  use  our  own 
experience  to  better  protect  them. 

We  also  understand  better  than  anyone  the  stakes  that  are 
involved  if  just  one  tribal  casino  is  found  to  be  under  mob 
i.i^luence,  or  if  just  one  tribal  casino  is  found  guilty  of  fixing 
gcimes .  The  ramifications  would  not  be  limited  to  tribal  casinos, 
but  would  reverberate  throughout  the  entire  industry.  We  cannot 
allow  a  few  unscrupulous  individuals  to  destroy  an  industry  that 
has  been  built  very  carefully  over  several  decades  and  that  is  the 
economic  lifeblood  of  two  states. 


169 


It  is  now  my  pleasure  to  introduce  Donald  Trump,  the  owner  of 
three  Atlantic  City  casinos,  including  the  Taj  Mahal,  New  Jersey's 
largest . 

Some  will  casually  dismiss  his  testimony  because  of  his 
financial  interests.  But  I  urge  you  to  listen  carefully,  because 
Mr.  Trump  speaks  as  one  who  has  seen  first-hand  the  extent  to  which 
proper  regulation  is  a  necessity  to  keep  the  games  clean  and 
prevent  the  infiltration  of  organized  crime.  He  also  presents  a 
rare  example  of  a  businessman  who,  cognizant  of  the  dangers  posed 
by  lax  oversight,  actually  seeks  greater  regulation  by  the  Federal 
Government . 

Thank  you,  Mr.  Chairman.  I  look  forward  to  joining  you  to 
question  the  additional  panels  scheduled  for  this  morning. 

MM 


170 


Arizona  1.   Yavapai -Apache  Tribe;   Yavapai-Apache  Reservation; 

Phoenix,  Arizona 

1.  Despite  the  fact  that  federal  officials  seized  the 
business  records  of  Robert  Sabes  in  July,  1993  for  Sabes'  alleged 
ties  to  organized-crime  figures,  the  Yavapai's  have  awarded  him 
preliminary  approval  to  manage  their  proposed  casino  north  of 
Phoenix.   (U.S.  News  and  World  Report,  8/23/93). 

Arizona  2.   Mohave-Apache  Indian  Community;  Fort  McDowell  Gaming 
Center;  Fountain  Hills,  Arizona 

1.  William  Fontana,  a  security  consultant  under  investigation 
by  the  FBI  and  the  Mohave-Apache  tribal  police,  for  allegedly 
bilking  $700,000  from  the  Fort  McDowell  tribal  gaming  center  has 
faced  similar  charges  twice  in  Arizona  and  once  in  Florida.  He  was 
hired  by  the  casino  manager  to  investigate,  Al  Weiss,  the  casino's 
security  director  in  an  effort  to  force  Weiss  out.  (  The  Arizona 
Republic,  2/3/93) 

California  1.  Barona  Rancheria;   California 

1.  Stewart  Siegel  admitted  to  being  a  front  for  organized 
crime;  former  head  of  the  tribe's  management  firm.  (Los  Angeles 
Times,  10/8/91)  . 

2.  Emmett  Munley,  the  head  of  a  management  firm  that  ran 
gaming  operations  on  the  Barona  Rancheria  twice  failed  to  get  a 
license  from  the  Nevada  Gaming  Control  Board.  (Los  Angeles  Times, 
10/8/91)  . 

3.  During  Congressional  hearings  in  1989,  an  anonymous 
witness,  who  was  later  revealed  to  be  Stewart  Siegel,  admitted  that 
he  had  cheated  an  Indian-gaming  establishment  out  of  $600,000  per 
year  by  paying  a  chief  $1,000  per  week.  (Los  Angeles  Times, 
10/7/91) 

Californiia   2.   Cabazon   Indian   Tribe;     Cabazon   Reservation; 

Southern  California: 

1.  According  to  '  t.ie  California  State  Attorney  General's 
Office,  in  May  1981,  after  tribal  vice  president  Fred  Alvarez  began 
complaining  of  money  skimming,  Alvarez  and  two  friends  were  shot 
dead.    (Los  Angeles  Times,  10/8/91) 

2.  A  poker  room  was  managed  by  reputed  organized  crime  figure 
Rocco  Zangari.   (Los  Angeles  Times,  10/8/91) 

3.  In  1985,  John  Nichols  a  non-Indian  advisor  to  the  Cabazon 
tribe  was  sentenced  to  four  years  in  prison  for  trying  to  hire  an 
undercover  policeman  to  serve  as  a  hit  man.  (San  Francisco 
Chronicle,  9/5/91) . 


171 


California   3.   Rincon   Indian  Reservation;    San  Diego  County, 
California 

1.  On  January  10,  1992,  the  reputed  acting  boss  of  Chicago's 
mafia,  Sam  "Wings"  Carlisi,  and  eight  other  organized-crime  figures 
were  indicted  in  a  fifteen  count  indictment  comprised  of  felony 
charges  for  their  attempts  to  take  over  gambling  operations  and 
skim  casino  profits.  (Proprietary  to  the  United  Press 
International,  January  27,  1992). 

California  4.  Jackson  Rahcheria;  Amador,  California 

1.  James  L.  Williams,  an  associate  of  Anthony  "Tumac" 
Accetturo,  managed  a  bingo  hall  in  1985.  Accetturo  was  recently 
convicted  of  being  the  head  of  the  Luchese  organized-crime  family 
of  New  York.  (Los  ANgeles  Times,  10/8/91)  .  Williams  was  convicted 
in  1987  of  failing  to  pay  taxes  on  some  $300,000  he  earned  from 
Indian  bingo  halls.  (New  Jersey  Law  Journal,  9/13/93);  (.S.  News 
and  World  Report,  8/23/93)  . 

California  5.   Mi-Wok  Tribe;   "Chicken  Ranch";  Tolumne,  California 

1.  In  1984,  an  arson  fire  swept  through  the  home  of  and 
incinerated  an  activist  for  the  Mi-Wok  tribe  named  Karl  Mathiesen. 
Mathiesen  had  complained  that  Indians  were  not  being  given  fair 
profits.  Although  there  it  was  never  proven  that  the  crime  was 
tied  to  gaming,  California  Deputy  Attorney  General  Rudolf  Corona, 
Jr.  has  stated  that  "someone  wanted  (Mathiesen)  very  dead."  (Los 
Angles  Times,  10/8/91)  . 

California  6.   Morongo  Reservation,  California 

1.  In  1984,  the  tribe  sued  an  outsider  for  running  an 
unauthorized  bingo  on  one  member's  land.  Testimony  later  disclosed 
that  reputed  crime  figures  Rocco  Zangari  and  Tommy  Marson 
frequented  the  hall.   (Los  Angeles  Times,  10/8/91). 

California  7.   Rvunsey  Rancheria;  California 

■•  A  former  tribal  secretary  was  indicted  for  tax  charges  for 
allegealy  fleeing  to  Nevada  with  a  Rolls  i\oyce  and  $400,000  in 
gaming  proceeds.  (Los  Angeles  Times,  10/7/91). 

California  8.   Soboba  Reservation;   Riverside,  California 

1.  One  Indian-gaming  management  firm  was  found  to  have 
embezzzled  $252,000  and  another  included  a  fugitive  from  the  French 
Connection  Heroin  case.   (Los  Angeles  Times,  10/8/91). 


172 


California  9.   Twenty-nine  Palms  Reservation;   San  Bernardino, 
California 

1.  Wiretaps  in  1987  overheard  Chicago  mobster  Chris  Petti 
discussing  a  possible  hotel-casino,  although  the  deal  never 
materialized.   (Los  Angeles  Times  10/8/91) . 

California  10.  Cloverdale  and  Hopeland  Bands  of  Porno  Indians; 

Northern  California 

1.  Angelo  Medure,  an  alleged  associate  of  a  Pittsburgh  crime 
family  plans  to  manage  casinos  for  the  Hopeland  Band  of  Pomo 
Indians  in  Northern  California,  the  Cloverdale  Pomo  Indians  in 
Northern  California.  His  involvement  with  the  White  Earth  Tribe  of 
Minnesota  has  led  to  investigation  by  local  law  enforcement 
officials.  (U.S.  News  and  World  Report,  8/23/93). 

Connecticut  1.    Mashantuckett  Pequot  Indian  Tribe;    Foxwoods 
Casino;  Ledyard,  Connecticut 

1.  Robert  W.  Werner,  Connecticut's  top  gambling  regulator, 
complained  that  state  police  are  not  authorized  to  investigate 
financial  backers  of  Indian  casinos;  the  Hartford  Courant  noted 
that  "  as  a  reuslt,  the  state  has  been  unable  to  conduct  a  full 
investigation  of  the  Malaysian  company  that  has  bankrolled  the  $60 
million  first  phase  of  Foxwoods  and  much  of  the  $142  million 
expansion  now  under  construction"   (Hartford  Courant,  5/27/93) . 

2.  The  Courant  reported  that  Werner  also  complained  of  "large 
backlogs"  created  by  an  inefficient  background-investigation 
system."   (Hartford  Courant,  5/27/93) 

3.  Connecticut  State  Police  suspect  a  gang  from  Boston  of 
theft  of  "several  thousand  dollars"  from  an  electronic  cash- 
transferral  system  at  the  Foxwoods  casino.  (Hartford  Courant, 
January  19,  1993) 

Florida  1.    Miccosulcee  Tribe;    Miccosukee  Indian  Reservation; 

Miami,  Florida 

1.  Tamiani  Partners  approved  a  bingo-papei  supply  contract 
with  Frank  Nannicola  of  Warren,  Ohio.  Nannicola  is  the  son-in-law 
of  Charles  Imburgia,  whom  the  Pennsylvania  Crime  Control  Commission 
claims  is  a  member  of  the  Genovese  organized-crime  family  from 
Pittsburgh.  The  National  Indian  Gaming  Commission  has  never 
investigated  Nannicola,  the  paper-supply  concern  run  by  Nannicola, 
or  Tamiani  Partners.   (U.S.  News  and  World  Rpeort,  8/23/93). 


173 


Florida  2.  Seminole  Tribe;  Seminole  Indian  Reservations;  Tampa  and 
Hollywood,  Florida 

1.  Two  independent  investigations  by  the  FBI  and  the 
Department  of  Interior's  Inspector  General  both  concluded  that  the 
management  companies  that  run  the  tribe's  bingo  operations  have 
ties  to  organized  crime.   (The  Blood  Horse,  January  30,  1993) 

2.  The  Interior  Department  report  indicated  the  tribe's 
management  contract  includes  no  opportunity  for  the  tribe  to 
maintain  control  over  the  management  firms.  The  state  has  no 
jurisdiction  on  reservations  and  the  federal  government  will  not 
spend  the  resources  to  ensure  adequate  oversight.  (The  Tampa 
Tribune,  January  7,  1993) 

Minnesota  1.   White  Earth  Tribe;   Shooting  Star  Casino;   Mahnomen, 
Minnesota 

1.  The  White  Earth  tribe's  dealing  with  Angelo  Medure,  an 
alleged  associate  of  Pittsburgh  organized-crime  figures,  and  Carmen 
Ricci,  an  alleged  associate  of  New  Jersey's  "Nicodemo  Scarfo" 
organized  crime  family,  have  raised  concerns  among  citizens  and 
law-enforcement  officials.   (U.S.  News  and  World  Report,  8/23/93). 

2.  Angelo  Medure,  an  alleged  associate  of  the  "Nicodemo 
Scarfo"  crime  family  also  plans  to  manage  casinos  for  the  Hopeland 
Band  of  Pomo  Indians  in  Northern  California,  the  Cloverdale  Pomo 
Indians  in  Northern  California,  and  the  Senaca-Cayuga  Tribe  in 
Miami,  Oklahoma  in  addition  to  the  White  Earth  Tribe  of  Minnesota. 
(U.S.  News  and  World  Report,  8/23/93). 

Minnesota  2.  Nett  Lake  Chippewa  Tribe;  Nett  Lake  Reservation; 

Minnesota 

1.  The  Nett  Lake  Chippewas  of  Minnesota,  leased  172  slot 
machines  from  a  company  it  later  discovered  was  owned  by  the  non- 
Indian  casino  manager  and  tribal  attorney.  As  a  result  the  tribe 
paid  $2.5  million  dollars  to  rent  machines  that  would  have  cost 
$800,000  to  purchase.  (The  Boston  Globe,  9/29/1993) 

Montana  1.  Assiniboine  and  bouix  Tribes;  Fort  Peck  Reservation; 

Wolf  Point,  Montana 

1.  The  Assiniboine  and  Souix  of  Montana  signed  a  contract  to 
build  and  manage  a  $10  million  gaming/  retail  complex  with  a 
company  that  had  no  experience  in  construction  or  casino 
management.  $5  million  of  financing  included  "three  instruments 
made  out  in  German,  drawn  on  a  Swiss  bank  account  and  payable  to  an 
Italian  national."  (The  Boston  Globe,  9/29/93). 


174 


2.  The  Inspector  General's  report  states  "The  international 
financial  arrangements  indicate  the  need  for  constant  scrutiny  to 
ensure  that  such  arrangements  are  sound  and  protect  the  interests 
of  Indian  tribes.   (The  Inspector  General's  report) 

New  York  1.    Saint  Regis  Mohawk  Tribe;    Saint  Regis  Mohawk 
Reservation;  upstate  New  York 

1.  In  1990  an  associate  of  John  Gotti  was  arrested  for 
shipping  slot  machines  to  the  reservation.  (Los  Angeles  Times, 
10/7/91) . 

2.  A  casino  —  legal  only  because  of  a  compact  signed  after 
1991  --  opened  there  in  July  1993. 

Oklahoma  1.  Seneca-Cayuga  Tribe;  Miami,  Oklahoma 

1.  Angelo  Medure,  who  is  involved  with  operation  in  the 
Seneca-  Cayuga  gambling  hall,  has  has  been  under  investigation  for 
his  dealings  with  tribal  casinos  in  California  and  Minnesota,  and 
for  his  connections  to  the  Genovese  crime  family. 

Wisconsin  1.   Wisconsin  Winnebago  Nation;  Winnebago  Reservation; 

Madison,  WI 

1.  Under  the  management  of  Glenn  Corrie,  the  Winnebago  tribe 
of  Madison,  Wisconsin  lost  $2,000,000  in  illegal  payments  to  Corrie 
and  cannot  account  for  another  $3,700,000  in  casino  revenue 
intended  for  the  tribe.   (Star  Tribune  (Wisconsin),  July  4,  1993) 

2.  The  Inspector  General's  reports  indicate  that  the  tribe 
saw  its  $2  million  dollars  in  savings  become  $2.5  million  in  debt 
over  18  months  due  to  casino  mismanagement.  (The  Boston  Globe, 
9/29/93) 

New  Jersey  1.  Ramapough  Mountain  People;  Ramapough  "Reservation"; 

Bergen  County,  New  Jersey 

1.  The  Rampough  Mountain  ^3ople,  a  group  currently  under ^ 
consideration  for  federal  recognition  that  plans  to  open  a  casino 
in  Northern  New  Jersey,  employed  Robert  Frank  as  a  "consultant" 
until  1991.  Frank  is  a  longtime  associate  of  Anthony  "Tumac" 
Accetturo,  who  has  been  involved  extensively  with  Indian  gaming 
operations  across  the  country.  Accetturo  was  recently  convicted 
(in  New  Jersey)  of  racketeering,  extortion,  and  being  the  head  of 
New  York's  "Luchese"  organized-crime  family.  Frank  also  maintains 
ties  with  James  Williams,  who  was  convicted  in  1987  of  failing  to 
pay  taxes  on  some  $300,000  he  earned  from  indian  gaming  bingo 
halls.  (New  Jersey  Law  Journal,  9/13/93);  (U.S.  News  and  World 
Report,  8/23/93) . 


175 

Mr.  Richardson.  I  thank  my  colleague. 

Mr.  Trump,  please  proceed,  and  welcome  to  this  committee. 

STATEMENT  OF  DONALD  TRUMP,  CHAIRMAN  AND  PRESIDENT, 
TRUMP  ORGANIZATION,  NEW  YORK,  NY 

Mr.  Trump.  Thank  you  very  much,  Mr.  Chairman.  It  is  an  honor 
to  be  here,  and  I  appreciate  the  time. 

I  had  a  rather  long  and  probably  very  boring  speech  drawn  out, 
and  I  have  decided  not  to  read  this  speech  after  having  heard  so 
much  this  morning.  It  was  politically  correct,  it  was  something  that 
was  going  to  get  me  in  no  trouble  whatsoever,  but  I  just  don't  feel 
it  is  appropriate  to  go  through  it. 

I  think  that  it  is  obvious  from  everything  you  have  heard  today 
that  organized  crime  is  rampant,  is  rampant — I  don't  mean  a  little 
bit — is  rampant  on  the  Indian  reservations.  People  know  it;  people 
talk  about  it. 

I  watched  the  FBI  discussing  the  fact  that  they  had  virtually  no 
agents  checking,  and  I  just  wondered  to  myself,  I  wonder  what  J. 
Edgar  Hoover  would  have  said  about  this. 

What  is  happening  on  the  Indian  reservations  is  known  by  the 
Indians  to  a  large  extent.  I  don't  believe  anything  is  being  done 
about  it.  And,  to  be  honest  with  you,  I  think  if  you  knew  some  of 
the  characters  that  you  are  dealing  with,  I  think  they  would  be 
afraid  to  do  anything  about  it. 

In  Atlantic  City  and  in  Las  Vegas  we  have  the  FBI,  many,  many 
folks  from  the  FBI,  we  have  our  own  people,  we  have  the  U.S.  at- 
torneys, we  have  sheriffs,  we  have  marshals,  we  have  everything 
watching  every  move. 

As  Congressman  Torricelli  said,  they  really  know  me  better  than 
I  know  myself,  everybody,  from  the  Casino  Control  Commission  all 
the  way  up  or  down.  It  is  really  an  incredible  situation  that  I  have 
to  go  through  in  terms  of  checks.  Every  check  I  sign,  every  docu- 
ment I  sign  is  scrutinized  by,  not  one,  not  two,  but  in  many  cases 
three,  four,  and  five  different  groups  of  people,  and  in  the  end  I  am 
not  saying  that  things  can't  be  done  wrong,  I  am  not  saying  that 
things  can't  happen,  but  people  are  going  to  get  caught;  they  are 
absolutely  going  to  get  caught. 

I  have  witnessed  so  many  different  things,  and  I  can't  tell  you. 
We  have  an  industry  in  Atlantic  City  that  has  contributed  $2.5  bil- 
lion to  the  Casino  Revenue  Fund.  That  is  a  fund  set  up  for  senior 
citizens  and  the  disabled.  Two  things  can  happen,  and  this  is  big 
money.  This  is,  9.25  percent  of  every  dollar  gets  sent  to  the  senior 
citizens  and  to  the  disabled  in  New  Jersey  and  beyond,  and  beyond 
in  terms  of  groups  of  people. 

If  this  continues  as  a  threat,  it  is  my  opinion  that  it  will  blow, 
it  will  blow  sky  high,  it  will  be  the  biggest  scandal  ever  or  one  of 
the  biggest  scandals  since  Al  Capone  in  terms  of  organized  crime, 
and  it  is  going  to  destroy  an  industry  that  is  a  legitimate  industry, 
an  industry  that  is  watched  carefully  by  everybody.  This  will  be  a 
scandal.  Congressman  Miller,  I  believe,  will  be  very  embarrassed 
by  it,  I  believe  a  lot  of  you  folks  that  are  standing  there,  I  believe 
honestly  knowing  that  what  you  say  is  perhaps  not  as  correct  as 
you  would  like  to  make  it  sound.  I  believe  that  there  is  going  to 
be  a  lot  of  embarrassed  and  a  lot  of  red  faces. 


176 

But  to  sit  here  and  listen  as  people  are  saying  that  there  is  no 
organized  crime,  that  there  is  no  money  laundering,  that  there  is 
no  anything,  and  that  an  Indian  chief  is  going  to  tell  Joey  Killer 
to  please  get  off  his  reservation  is  almost  unbelievable  to  me. 

I  listen  about  sovereign  nation,  the  great  sovereign  nation,  and 
yet  $30  billion  to  all  of  the  various  programs  was  contributed  to  the 
sovereign  nation  for  education,  for  welfare,  for  this,  for  that. 

I  listened  as  to  sovereign  nation,  and  yet  the  sovereign  nation 
and  the  people  of  the  sovereign  nation  have  the  right  to  vote  in  our 
country. 

I  listen  as  to  sovereign  nation,  all  of  the  medical,  all  of  the  other 
treaties. 

I  want  to  know,  can  Indians  sign  treaties  with  foreign  nations? 
Can  they  go  and  sign  a  treaty  with  Germany?  The  answer  is  no. 
How  is  it  a  sovereign  nation? 

It  is  only  a  sovereign  nation  in  that  Indians  don't  have  to  pay 
tax,  and  what  you  have — what  you  have  is,  you  have  a  very  inter- 
esting dichotomy.  We  are  paying  $2.5  billion  worth  of  tax.  The  Indi- 
ans don't  have  to  pay  tax.  Nobody  is  more  for  the  Indians  than 
Donald  Trump. 

And  you  ask  about  competing.  I  love  to  compete.  Nobody  likes — 
and  I  think  many  of  you  folks  up  there  know  for  a  fact  that  I  love 
to  compete.  But  I  like  to  compete  on  an  equal  footing.  I  am  compet- 
ing and  paying  hundreds  of  millions  of  dollars  in  tax.  My  so- 
called — as  you  would  call  them — opponent — and  they  are  not  an  op- 
ponent— ^but  my  opponent  is  competing  and  paying  no  tax.  It  is  not 
a  fair  situation.  It  is  not  fair  to  the  States. 

If,  in  fact,  Indian  gaming  were  allowed  in  northern  New  Jersey, 
the  Fund  for  Senior  Citizens  would  be  totally  destroyed,  the  fund 
for  medical  care  and  all  of  the  other  uses  that  this  tax  money  is 
paid  for  would  be  totally  destroyed,  and  I  think  that  is  a  real  big 
problem. 

And  one  other  thing  I  might  add.  We  talk  about  Indians  like 
gaming  is  going  to  be  the  salvation.  You  have  a  group  of  Indians 
in  Connecticut.  I  have  heard  300,  I  have  heard  400.  It  is  a  casino 
that  is  far  and  away  the  most  profitable  in  the  world  because, 
again,  they  don't  pay  tax.  Why  don't  they  distribute  some  of  the 
funds  to  all  of  the  other  Indians  throughout  the  United  States  that 
don't  have  a  location  of  Connecticut  right  next  to  New  York  City 
and  right  next  to  Boston? 

Why  is  it  that  the  Indians — ^we  talk  about  these  300  Indians 
which,  by  the  way,  was  rather  recently  formed — why  don't  they 
make  their  contributions  to  all  of  the  Indians?  You  have  probably 
a  profit  on  that,  I  would  estimate,  of  $400  or  $500  million.  This 
goes  to  a  total  of  about  300  to  400  Indians.  Why  don't  we  make 
contributions?  Why  doesn't  this  money  get  taxed,  and  why  doesn't 
this  money  be  distributed  throughout  the  United  States  to  Indians 
who  locationally  can't  have  a  reservation  where  you  would  have  a 
casino  because  the  casino  is  too  far  away  from  the  population? 

So  I  listened  to  what  has  gone  on  today,  and  truly  I  am  amazed, 
and  I  am  disappointed.  I  am  disappointed  as  a  citizen.  When  I  have 
to  sit  here  and  listen  to  people  saying  that  everything  is  just 
peachy-dory,  it  is  not,  folks.  It  is  going  to  blow.  It  is  just  a  question 


177 

of  time,  and  when  it  blows  you  are  going  to  have  a  lot  of  very  em- 
barrassed faces  sitting  right  where  you  folks  are  sitting  right  now. 

Thank  you  very  much. 

[Prepared  statement  of  Mr.  Trump  follows:] 


178 

TESTIMONY 

Of 

DONALD  TRUMP,  PRESIDENT 

TRUMP  ORGANIZATION 

Before 
The 

SUBCXDMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 


October  5, 1993 
9:30  a.m. 


179 


Good  morning  Mr.  Chaimum  and  Members  of  the  Committee.  Thank  you 
for  the  privilege  of  appearing  before  you  today  on  this  important  issue. 

Thank  you.  Bob,  for  that  warm  introduction,  and  thank  you  for  being  here 
with  me  tod^.  Your  presence  clearly  indicates  the  importance  of  this  matter  to  ±e 
people  of  New  Jersey. 

I'm  Donald  TVump.  Tm  from  New  York  where  I  develop,  restore  and  create 
new  prcpeities  and  hotels.  As  Bob  Totricelli  noted,  I  also  operate  three  casinos  in 
Atlantic  City  under  license  from  the  State  of  New  Jersey  and  tliat  is  why  I  am  here 
today.  Those  casinos  have  stockholders  and  bondholders  other  than  myself.  As 
Chairman  of  the  Board  of  these  casinos,  I  represem  their  interests  as  weU. 

Much  has  been  said  in  recent  weeks  about  the  big  casino  interests  -  people 
like  Donald  Thmip  taking  on  America's  native  people.  Trump  and  all  the  moneyed, 
muscle  crowd  attacking  minorities.  That  isn't  the  case  at  all.  In  a  sense,  this  has 
little  to  do  with  the  Indians.  Neither  I  nor  my  colleagues  in  the  indtistry  oppose  the 
right  of  our  first  countrymen  to  seek  economic  determinadon  and  to  secure  their 
futures.  As  you  know,  many  people  in  our  industry  are  helping  Indian  tribes 
accomplish  that  goaL 

I  am  not  here  to  quarrel  with  Indians.  But  I  and  others  do  have  a  quanel 
with  the  federal  government  And  when  it  comes  time  for  a  single  citizen  to  stand 
up  to  the  power  and  resources  of  Washington,  all  of  us,  including  Donald  Trump, 
are  just  members  of  John  Q.  Public.  A  little  guy  against  the  biggies. 


180 


But  America  is  a  great  country  and  even  little  guys,  in  this  case  even  Donald 
Trump,  have  some  rights.  And  states  also  have  some  rights  in  our  constitutional 
system.  We  believe  that  in  this  case  the  rights  of  Donald  Trun^),  the  residents  of 
New  Jersey  and  the  state  itself  are  quite  synoiqaQous. 

As  stated,  I  operate  three  casinos  in  Atlantic  Oty.    Aaually,  although  a  lot 
of  people  seem  to  think  I  know  little  about  the  business,  I  am  the  largest 
individual  casino  operator  in  the  world.  I  say  that  modestly  as  you  would  expect 

However,  in  New  Jersey,  I  and  my  colleagues  don't  merely  operate  casinos 
for  our  own  fun  and  profit  We  are  economic  partners  with  the  state.  The  first  9.25 
percent  of  every  dollar  we  take  in  goes  to  New  Jersey  -  off  the  top  -  off  our  gross, 
not  our  net  Eight  percent  of  that  goes  to  support  the  Casino  Revenue  Fund  (CRF). 
This  is  a  state  program  we  fund  which  supports  seniors  and  thr  disabled.  It  allows 
seniors  to  buy  prescription  drugs  for  $5.00,  offsets  their  property  taxes,  helps  reduce 
their  electricity  bills  and  provides  other  services  like  home  health  care.  It  offers  our 
seniors  and  disabled  both  security  and  digniQr. 

In  1992  New  Jersey  casinos  provided  $255  million  to  this  fund.  Since  1978 
when  Atlantic  City's  first  casino  opened,  our  industry  has  provided  S2ii  billion  to  the 
CRF. 

The  next  1.25  percent  of  gross  casino  revenue  goes  to  a  state  agency,  the 
Casino  Reinvestment  Development  Authority  (CRDA).  We  are  the  sole  funding 
source  of  that  organization.  Last  year  we  provided  $40  million  to  the  CRDA  which 
invests  these  funds  in  public  projects  throughout  New  Jersey.  Through  2009,  it  is 


181 


estimated  the  CRDA  will  invest  $654  million  in  Atlantic  City,  $413  million  in 
southern  New  Jersey  and  $297  million  in  northern  New  Jersey.  This  money  has  and 
will  continue  to  bxiild  housing,  day  care  centers,  senior  citizen  con^)lexes  and 
shopping  centers  in  all  of  the  state's  urban  areas.  It's  a  lot  of  money,  and  it's  for 
worthwhile  causes. 

Some  75,000  New  Jerseyans  and  their  families  are  working  because  of  our 
business;  more  than  43,000  directly  in  Atlantic  Oty.  We  employ  well  over  half  of 
the  city's  entire  work  force.  In  1992  alone  we  paid  more  than  a  billion  dollars  in 
wages  and  benefits  to  our  people. 

More  than  $5  billion  of  investment,  that's  right  $5  billion  of  private  capital 
has  made  Atlantic  City  the  economic  base  of  the  entire  southern  half  of  New  Jersey. 
We  represent  over  4  percent  of  the  state  budget. 

We  have  accomplished  all  this  under  the  most  restrictive  regulatory 
standards  in  the  country.  We  are  the  most  highly  regulated  business  in  any  capacity 
in  any  venue.  We  pay  the  state  over  $60  million  annually  for  our  own  regulation. 
That's  ccnect  •  we  pay  to  regulate  ourselves  although  state  regulation  is  separate 
and  apart  from  us  and  beyond  reproach. 

As  I  said,  our  regulation  is  stiff.  Each  of  my  businesses  is  relicensed  on  a 
biannual  basis.  As  of  now,  I  must  personally  requalify  each  year.  All  key  employees 
must  do  so.  This  is  no  easy  process.  Every  activity  and  transaction  are  checked  by 
the  State  Police.  Some  eighty  pages  of  documenution;  associations,  personal  and 
business  checks;  family  background;  and  resources.  It  is  totally  pervasive.  Actually, 


182 


I  am  told  that  some  of  the  owners  of  sports  franchises  in  our  country  would  not 
qualify  for  licensure  in  New  Jerse/i  casino  industry. 

I  can  state  without  fear  that  we  are  solid  corporate  dtizeni  operating  a  clean 
and  honest  entertainment  business.  Both  we  and  New  Jersey  are  proud  of  this 
record  and  rightfully  so. 

Do  you  wonder,  therefore,  why  we  are  so  deeply  concerned,  even  paranoid, 
that  Indian  tribe  operations  are  not  similarly  regulated.  Do  you  know  what  would 
happen  to  our  reputations,  our  businesses  if  organized  crime  gained  a  foothold  in 
any  of  the  Indian  operations.  I  am  not  suggesting  that  organized  crime  has  done  to 
although  there  have  been  numerous  articles  in  the  press  that  this  has  happened.  It 
is  the  mere  possibility  that  scares  us.  A  scandal  in  any  Indian  casiiu)  operation 
would  reilect  on  us,  rub  off  on  our  industry.  Our  honesty,  our  integrity,  our 
reputations  would  be  compromised  at  once.  It  is  an  old  story  -  guilt  by  association. 
Years  of  work  down  the  drain.  We  know  that  Indian  tribes  want  clean  and  honest 
operations.  However,  we  also  know  that  people  involved  in  advising  some  of  the 
tribes,  those  operating  and  funding  certain  of  their  operations,  are  not  subject  to  the 
strict  licensing  and  qualifying  regulations  in  place  in  New  Jersey  and  other  states. 
Yes,  we  are  concerned,  very  concerned.  The  federal  government  has  unleashed  a 
process  without  regard  to  the  economic  or  social  consequences  to  the  stau  in  which 
the  activity  takes  place. 

However,  I  am  not  in  law  enforcement  so  I  will  let  the  law  enforcement 
people  discuss  these  matters. 


183 


I  am  here  to  talk  about  what  oould  happen  in  New  Jeney  if  this  process  were 
applied  there.  I  would  like  to  trace  for  you  what  would  happen  to  xis,  our  employees 
and  their  families,  oiu  seniors  and  disabled  if  the  federal  govemmem  luilaterally 
detennined  to  recognize  an  Indian  tribe  in  northern  New  Jersey  near  New  York 
Qty.  Please  note  I  used  the  word  would;  not  what  oould  happen. 

Pint  of  all,  an  Indian  casino  operation  in  northern  New  Jersey  would  be  the 
econoo:ic  death  knell  to  Atlantic  City.  Much  of  our  market,  which  we  and  the  state, 
our  economic  partner,  have  worked  hard  to  aeate  and  protect,  would  disappear. 
No  one  will  ride  two  hours  in  trafSc  to  do  the  same  thing  that  they  could  do  in 
fifteen  minutes  or  a  half  hour.  We  would  lose  jobs  •  a  lot  of  them  because  casinos 
would  be  forced  to  close  in  a  dwindling  market. 

New  Jersey's  public  investment  in  a  new  convention  center,  in  airport 
development  would  be  seriously  compromised.  Millions  spent  on  new  infrastructure 
and  highway  development  would  have  been  wasted.  Atlantic  City,  even  today,  is  a 
state  resource  and  treasure  which  would  be  immediately  undermined. 

Let's  forget  Donald  Trump  and  the  casino  industry  for  a  moment.  What 
about  New  Jerse/i  citizens.  Certainly  the  millions  for  seniors  and  the  disabled  and 
reinvestment  would  decrease  quite  measurably.  The  money  will  not  be  replaced  by 
an  Indian  casino. 


What  about  the  state?  Would  New  Jersey  be  able  to  assure  itself  that  its 
public  policy  of  strict  regulation  would  be  maintained?  Not  to  the  extent  that  it  now 
controls  the  regulation  of  gaming  in  Atlantic  Qty.  Under  existing  lacws,  no  state  has 


184 


prerogative  over  Indian  gaming.  Therefore,  the  state  would  be  powerless  to  cany 
out  it&  regulatory  policy  over  these  operations.  It  is  quite  a  dichotomy.  New  Jersey, 
which  has  prided  itself  as  the  state  with  the  strictest  form  of  casino  regulation,  could 
be  forced  to  accept  lesser  standards  for  Indian  tribes  operadng  within  its  sute.  Such 
is  the  nature  of  State  -  bulian  compact  negotiationa  where  states  are  forced  to 
accept  less  than  optimum  regulatory  measures  out  of  fear  that  they  will  be  sued  by 
Indian  tribes  for  not  negotiating  in  'good  faith.* 


And  what  about  worken.  Did  you  know,  for  example,  this  week  at  the  AFL- 
CIO  meeting  in  San  Francisco  that  some  of  our  largest  unions,  the  Service  Workers, 
the  Seafarers,  the  Operating  Engineers  and  the  Restaurant  and  Hotel  Worken 
joined  to  form  the  Riverboat  and  Indian  Gaming  Service  Trade  Council?  The 
purpose  of  the  council  is  clear-cut  •  to  protect  workers.  Do  you  know  why?  Because 
federal  laws,  like  the  Taft-Hartley,  like  the  jurisdiction  of  the  National  Labor 
Relations  Board  do  not  apply.  They  also  cease  to  exist  at  the  tribal  land  doorstep. 
At  present,  union  worken  even  in  states  like  New  Jersey,  would  have  no  federally  or 
state  protected  rights  or  the  ability  to  organize  in  casinos  operated  on  tribal  lands. 
The  unions  hope  to  do  something  about  this.  They  hope  to  gain  the  right  to 
recognition,  the  right  to  organize  if  they  so  choose.  Quite  frankly,  I  hope  they  have 
better  luck  than  we  have  had  so  far. 

So  gentlemen,  the  issue  is  really  not  Donald  Trump  and  the  moneyed  casino 
interests  against  various  Indian  tribes.  The  issue  is  whether  our  government  in 
recognizing  the  legitimate  rights  of  our  native  Americans  will  simultaneously  assure 
that  the  rights  of  our  state's  own  citizens,  our  workers,  our  senion  and,  yes,  even 
Donald  Trump,  are  not  bargained  away  or  stomped  upon  in  the  process. 


185 


Tbat  is  the  reaiOQ  that  n^ielf  and  otben  are  supporting  Bob  Torricelli's 
legislation  and  also  why  I  filed  a  lawsuit  against  the  Seaetaiy  of  the  Interior.  I'm  a 
citizen,  and  I  believe  it  is  nqr  right  to  protect  thyself  and  my  companies  when  the 
government  reftiaes  to  do  so. 

Thank  you. 


186 

Mr.  Richardson.  Thank  you. 

Mr.  Trump,  let  me  start  out  by  exercising  the  prerogative  of  the 
chair  in  asking  the  first  question.  You  mentioned  the  words  "ramp- 
ant organized  crime  infiltration  on  Indian  gaming." 

Mr.  Trump.  Yes,  sir. 

Mr.  Richardson.  Have  you  presented  this  evidence  to  the  FBI 
or  to  this  committee?  Do  you  have  documentation  of  that? 

Mr.  Trump.  Well  what  I  have  is,  I  have  many,  many  instances 
of  events  one  after  another — organized  crime  figures,  killings, 
deaths,  laundering  of  money.  I  mean  I  could  read  them  to  you. 
Frankly,  this  would  have  been  much  more  interesting  to  read  than 
my  own  testimony.  That  is  why  I  decided  not  to  read  my  testimony. 
Wisconsin,  White  Earth  tribe,  all  the  Apache  Tribe — all  instances 
one  afl:er  another.  I  have  more  instances  here.  You  folks  know  that. 
I  really  believe  you  know  that,  and  I  could  give  you  any  docu- 
mentation I  have. 

Now,  this  is  without  having  people  watching.  This  is  with  listen- 
ing to  an  FBI  person  sajdng  that  he  has  got  no  men — no  men, 
zero — assigned  to  the  reservation. 

At  the  Taj  Mahal,  I  spent  more  money  on  my  security  and  my 
security  systems  than  most  Indians  spend  in  building  their  entire 
casino,  and  I  will  tell  you,  without  that  kind  of  security  equipment 
and  that  surveillance  equipment  and  the  numbers  of  people,  you 
cannot  police  it. 

But  what  you  really  also  need  is,  you  need  Grovemment  help. 
When  the  bad  guys  come  in,  when  the  tough  guys  come  in,  you 
have  got  to  have  somebody  behind  you.  There  is  nobody  behind 
these  people.  There  is  nobody  there.  There  is  nobody  there  to  help, 
and  when  the  tough  guys  go  up  and  they  say  what  they  want,  I 
truly  don't  believe — I  truly  do  not  believe,  and  I  don't  believe  you 
believe,  that  anybody  is  going  to  do  anything  about  it.  They  are 
going  to  get  ever3^hing  they  want. 

Mr.  Richardson.  Well,  Mr.  Trump,  I  don't  agree  with  that.  Let 
me  just  say,  we  want  your  evidence.  Now  you  have  detailed  that 
in  your  opening  statement.  We  want  to  investigate  this.  This  com- 
mittee is  not  trying  to  cover  anj^hing  up.  We  are  interested  in  this 
issue. 

You  have  basically  stated  that  the  problem  seems  to  be  that  the 
FBI  doesn't  have  any  people,  or  is  that  correct? 

Mr.  Trump.  I  think  it  is  far  beyond  that.  I  think  that  people  have 
got  paper  bags  over  their  faces  and  nobody's  looking.  Everybody,  it 
seems  to  me,  from  even  just  a  common  sense  standpoint,  knows 
what  is  going  on.  Everybody  knows  what  is  going  on. 

I  can  tell  you  this.  In  New  Jersey  you  have  what  is  called  a  black 
list,  or  a  list  of  people  that  we  are  not  allowed  to  do  business  with. 
These  people  were  a  constant  source  of  irritation.  I  can  supply  the 
list  of  names  if  you  would  like  the  list  of  names.  But  it  was  a  large 
list  of  names,  and  these  were  not  very  good  people,  and  some  of 
them  were  plenty  rough.  These  people  were  a  constant  irritation, 
a  constant  problem.  We  weren't  supposed  to,  but  they  were  always 
trying  to  get  in,  trying  to  be  down  there,  trying  to  do  whatever  they 
do,  and  it  was  a  constant  source. 

One  of  my  executives  told  me  the  other  day,  "The  only  good  thing 
about  the  Indian  reservation  is  that  we  don't  see  these  people  any 


187 

more,  we  don't  see  them  any  more."  Now  why  don't  we  see  them? 
I  guess  because  they  have  a  lot  easier  fish,  I  don't  know,  but  we 
don't  see  them  any  more.  So  it  makes  our  job  a  little  bit  easier. 

Mr.  TORRICELLI.  Mr.  Chairman? 

Mr.  Richardson.  Mr.  Torricelli. 

Mr.  Torricelli.  May  I  address  your  question?  I  was  a  young 
lawyer  in  our  governor's  office  in  New  Jersey  when  we  legalized  ca- 
sino gaming,  and  I  think  that  experience  will  help  answer  your 
question. 

We  were  extraordinarily  naive.  We  passed  good  laws  to  keep  or- 
ganized crime  out  of  the  casinos,  and  I  am  proud  of  what  we  did. 
A  year  hadn't  gone  by  when  they  were  monopolizing  vending  ma- 
chines, and  then  laundry  operations.  You  will  never  find  the  pres- 
ence of  organized  crime  without  an  intense  effort. 

It  is  said  there  are  none  so  blind  as  those  who  will  not  see.  I 
didn't  come  here  to  embarrass  the  FBI  today  in  my  questioning.  It 
was  simply  to  point  out  that  this  will  take  a  concerted  effort.  Mr. 
Trump  may,  by  chance,  come  upon  a  name,  as  I  have  in  these  22 
instances,  from  the  popular  media,  but  I  will  assure  you,  if  the  pop- 
ular media  can  find  22  States  with  organized  crime  involvement  in 
a  cursory  look,  a  dedicated  effort  by  the  FBI  is  going  to  find  some- 
thing more  substantial. 

I  first  came  to  this  issue  in  an  interesting  way.  I  heard  constitu- 
ents of  mine  were  raising  money  to  create  a  management  company 
in  South  Dakota  to  run  an  Indian  bingo  hall.  I  knew  who  they 
were,  and  I  knew  they  were  connected,  and  I  got  curious  with  the 
issue.  That  case  isn't  here,  never  been  written  about,  nobody  even 
knows  about  it.  But  this  will  not  come  from  citizens  rushing  to  the 
FBI,  it  will  come  because  we  have  a  concerted  effort  to  establish 
laws,  to  regulate,  and  then  to  fine. 

Mr.  Richardson.  I  agree  with  my  colleague. 

Let  me  ask  my  last  question  to  Mr.  Trump. 

Mr.  Trump.  Yes,  sir. 

Mr.  Richardson.  Did  you  submit  this  list  to  the  FBI  at  any 
time? 

Mr.  Trump.  This  was  a  list  that  was  given  to  me  by  lawyers  of 
various  things  that  are  currently  going  on  and  investigations  and, 
by  the  way,  convictions,  many  convictions  on  the  list. 

I  am  not  a  law  enforcement  officer.  I  am  not  supposed  to  be  going 
around  checking  Indian  reservations.  That  is  what  you  have  the 
FBI  for,  and  they  are  very  capable,  the  most  capable.  But  that  is 
not  my  job.  My  job  is  to  come  here  and  tell  you  that  from  a  stand- 
ard of  the  largest  casino  operator  in  the  world,  which  I  am,  I  will 
tell  you  that  there  is  no  way  the  Indian  gaming  is  going  to  be  con- 
trolled and  not  be  totally  taken  advantage  and,  in  my  opinion,  to- 
tally taken  over  in  almost  every  instance,  totally  taken  over,  by  the 
mob.  There  is  no  way  that  the  Indians  are  going  to  protect  them- 
selves from  the  mob.  There  is  no  way. 

I  think  most  of  you  people  sitting  up  there  honestly  believe  that. 
I  don't  know  that  that  is  going  to  affect  your  judgment,  but  I  be- 
lieve that  you  honestly  believe  that. 

From  a  common  sense  standpoint,  from  a  practical  standpoint, 
there  is  no  way  the  Indians  are  going  to  protect  themselves  from 
the  mob. 


188 

Mr.  Richardson.  But  we  have  no  evidence  that  the  FBI  has 
checked  any  of  the  22  instances  out, 

Mr.  Trump.  You  can't  have  evidence  when  the  FBI  doesn't  have 
one  man  assigned  to  Indian  gaming.  How  can  you  have  evidence? 
That  is  exactly  the  point.  You  need  armies  of  people,  armies  of  peo- 
ple to  check.  Every  check  that  they  have  written,  you  have  got  to 
check  those  checks.  You  have  got  to  see  who  is  supplying  the  meat, 
who  is  supplying  the  potatoes,  who  is  supplying  the  potato  chips. 
You  have  got  to  check  every  supplier  going  into  that  Indian  res- 
ervation. 

The  checking  is  a  joke.  The  checking  is  a  joke,  and  you  have  got 
to  do  something  because  this  will  be  the  biggest  crime  problem  in 
this  country's  history,  in  my  opinion. 

Mr.  Richardson.  Let  me  just  conclude  by  making  a  formal  re- 
quest to  you,  Mr.  Trump,  that  you  provide  this  committee  with  all 
the  available  data,  documentation,  that  you  and  my  colleague  have 
discussed  today. 

Mr.  Trump.  It  would  be  an  honor.  Thank  you. 

[The  information  follows:] 


189 


October  25,  1993 


The  Honorable  Bill  Richardson 

Chairman,  Native  American  Affairs  Subcommittee 

U.S.  House  of  Representatives 

2349  Rayburn  House  Office  Building 

Washington,  D.C.  20515 


Dear  Congressman  Richardson, 

In  the  recent  hearing  of  the  Native  American  Subcommittee  of  the  House  Natural 
Resources  Committee,  Chairman  Miller  rep>-atcdl>  chal'enged  me  to  put  forward  evidence 
of  organized  crime  involvement  in  the  Indian  j^aming  industrj'. 

I  am  enclosing  a  list  of  13  examples  of  jjcrious  organized  crime  involvement  in  Indian 
reservation  casinos  many  of  which  were  widely  reported  in  the  press.  The  list  includes  the 
following  incidents: 

*  Barona  Rancheria;  California 

Stewart  Siegel  admitted  to  being  a  front  for  organized  crime; 
former  head  of  the  tribe's  management  firm. 
Exhibit  A  (Los  Angeles  Times.  10/8/91). 

Emmett  Munley,  the  head  of  a  manngenienl  firm  that  ran 
gaming  operations  t^l'icL•  ".:i!i('  '.•:  -'ct  a  license  from  the  Nevada 
Gaming  Control  Board. 
Exhibit  A  (Los  Angeles  Times,  10/8/91). 

During  Congressional  hearings  in  1989,  an  anonymous  witness, 
who  was  later  revealed  to  be  Stewart  Siegel,  admitted  that  he 
had  cheated  an  Indian  gaming  establishment  out  of  $600,000 
per  year  by  paying  a  Ci'.Ief  $1,000  per  week. 
Exhibit  B  (Los  Angeles  Times,  10/7/91). 


THE  TRUMP  ORGANIZATION 

725  RFTH  AVENUE 'NEW  YORK,  IM.Y.  10022     212  •832 '2000     TELEX '427715 


84-760  O  -  94  -  7 


190 


Cabazon  Indian  Tribe:  Cabazon  Reservation; 
Southern  California 

According  to  the  California  State  Attorney  General's  Office,  in  May  1981, 
after  tribal  Vice  President  Fred  Alvarez  began  complaining  of  money 
skimming,  Alvarez  and  two  friends  were  shot  dead. 
Exhibit  A  (Los  Angeles  Times,  10/8/91). 

A  poker  room  was  managed  by  reputed  organized  crime  figure 

Rocco  Zangari. 

Exhibit  A  (Los  Angeles  Times,  10/8/91). 

In  1985,  John  Nichols  a  non-Indian  advisor  to  the  Cabazon 
Tribe  was  sentenced  to  four  years  in  prison  for  trying  to  hire 
an  undercover  policeman  to  serve  as  a  hit  man. 
Exhibit  C  (San  Francisco  Chronicle,  9/5/91). 

Jackson  Rancheria:  Amador.  California 

James    L.    Williams,    an    associate    of    Anthony    "Tumac" 
Accetturo,  managed  a  bingo  hall  in  1985.     Accetturo  was 
recently  convicted  of  being  the  head  of  the  Luchese  organized 
crime  family  of  New  York. 
Exhibit  A  (Los  Angeles  Times,  10/8/91). 

Williams  was  convicted  in  1987  of  failing  to  pay  taxes  on  some 
$300,000  he  earned  from  Indian  bingo  halls. 
Exhibit  D  (New  Jersey  Law  Journal,  9/13/93); 
Exhibit  E  (U.S.  News  and  World  Report,  8/23/93). 

Miccosukee  Tribe;  Miccosukee  Indian  Reservation; 
Miami.  Florida 

Tamiani  Partners  approved  a  bingo-paper-supply  contract  with 
Frank  Nannicola  of  Warren,  Ohio.  Nannicola  is  the  son-in-law 
of  Charles  Iniburgia,  v»hom  the  Pennsylvania  Crime  Control 
Commission  claims  is  a  member  of  the  Genovese  organized 
crime  family  from  Pittsburgh.  The  National  Indian  Gaming 
Commission  has  never  investigated  Nannicola,  the  paper-supply 
concern  run  by  Nannicola,  or  Tamiani  Partners. 
Exhibit  E  (U.S.  News  and  World  Report,  8/23/93). 


191 


*  Mi-Wok  Tribe:  "Chicken  Ranch":  Toliimne.  California 

In  1984,  an  arson  fire  swept  through  the  home  of  and 
incinerated  an  activist  for  the  Mi-Wok  Tribe  name  Karl 
Mathiesen.  Mathiesen  had  complained  that  Indians  were  not 
being  given  fair  profits.  Although  it  was  never  proven  that  the 
crime  was  tied  to  gaming,  California  Deputy  Attorney  General 
Rudolf  Corona,  Jr.  has  stated  "someone  wanted  [Mathiesen] 
very  dead." 
Exhibit  A  (Los  Angeles  Times,  10/8/91). 

*  Morongo  Reservation:  California 

In  1984  the  tribe  sued  an  outsider  for  running  an  unauthorized 
bingo  on  one  member's  land.    Testimony  later  disclosed  that 
reputed  crime  figures  Rocco  Zangari  and  Tommy  Marson 
frequented  the  hall. 
Exhibit  A  (Los  Angeles  Times,  10/8/91). 


Ramapough  Mountain  People;  Ramaoough  "Reservation'; 
Bergen  County.  New  Jersey 

The  Ramapough  Mountain  People,  a  group  currently  under 
consideration  for  a  federal  recognition  that  plans  to  open  a 
casino  in  Northern  New  Jersey,  employed  Robert  Frank  as  a 
"consultant"  until  1991.  Frank  is  a  longtime  associate  of 
Anthony  "Tumac"  Accetturo,  who  has  been  involved 
extensively  with  Indian  gaming  operations  across  the  country. 
Accetturo  was  recently  convicted  (in  New  Jersey)  of 
racketeering,  extortion,  and  being  the  head  of  New  York's 
"Luchese"  organized  crime  family.  Frank  also  maintains  ties 
with  James  Williams,  who  was  convicted  in  1987  of  failing  to 
pay  taxes  on  some  $300,000  he  earned  from  Indian  bingo  halls. 
Exhibit  D  (New  Jersey  Law  Journal  9/13/93); 
Exhibit  E  (U.S.  News  and  World  Report,  8/23/93). 

Rincon  Indian  Reservation;  San  Diego  County. 
California 

On  January  10,  1992  the  reputed  acting  boss  of  Chicago's 
mafia,  Sam  "Wings"  Carlisi,  and  eight  other  organized  crime 
figures  were  indicted  in  a  fifteen-count  indictment  comprised 
of  felony  charges  for  their  attempts  to  take  over  gambling 
operations  and  skim  casino  profits. 
Exhibit  F  (Proprietary  to  the  United  Press  International,  1/27/92). 


192 


Saint  Regis  Mohawk  Tribe;  Saint  Regis  Mohawk 
Reservation;  upstate  New  York 

In  1990  an  associate  of  John  Gotti  was  arrested  fof  shipping 
slot  machines  to  the  reservation. 
Exhibit  B  (Los  Angeles  Times,  10/7/91). 

A  casino  -  legal  only  bec;iuse  of  a  compact  signed  after  1991 
—  opened  there  in  July  1993. 

Soboba  Reservation;  Riverside  California 

One  Indian  gaming  management   lirm  was  found  to  have 
embezzled  $252,000  and  another  included  a  fugitive  from  the 
French  Connection  Heroin  case. 
Exhibit  A  (Los  Angeles  Times,  10/8/9}). 

White    Earth    Tribe;    Shooting    Star    Casino;    Mahnomen, 
Minnesota 

The  White  Earth  Tribe's  dealings  with  Angelo  Medure,  an 
alleged  associate  of  Pittsburgh  organized  crime  figures,  and 
Carmen  Ricci,  an  alleged  associate  of  New  Jersey's  "Nicodemo 
Scarfo"  organized  crime  family,  have  raised  concerns  among 
citizens  and  law  enforcement  officials. 
Exhibit  E  (U.S.  News  and  World  Report,  8/23/93). 

Medure  also  plans  to  manage  casinos  for  the  Hopeland  Band  of 
Pomo  Indians  in  Northern  California,  and  the  Senaca-Cayuga 
Tribe  in  Miami,  Oklahoma. 
Exhibit  E  (U.S.  News  and  World  Report,  8/23/93). 

Wisconsin     Winnebago    Nation;     Winnebago     Reservation; 
Minnesota 

Under  the  management  of  Glenn  Corrie,  the  Winnebago  Tribe 
of  Madison,  Wisconsin  losl  $2,000,000  in  illegal  payments  to 
Corrie  and  cannot    account  lor  auother  $3,700,000  in  casino 
revenue  intended  for  the  tribe. 
Exhibit  G  (Star  Tribune,  Wisconsin,  7/4/93). 


193 


*  Yavapai-Apache  Tribe;  Yavapai-Aptiche  Reservation; 

Phoenix.  Arizona 

Despite  the  fact  that  federal  officials  seized  the  business  records 

of  Robert  Sabes'  in  July  1993  for  Sabes'  alleged  ties  to 

organized  crime  figures,  the  Yavapai's  have  awarded  him 

preliminary  approval  to  manage  their  proposed  casino  north  of 

Phoenix. 

Exhibit  E  (U.S.  Ne>vs  and  World  Report,  8/23/93). 

All  of  these  incidents  were  found  despite  tlie  fact  that  the  F.B.I. ,  per  the  testimony 
of  Agent  Jim  E.  Moody  (Section  Chief,  Organized  Crime/Drug  Operations  of  the  Criminal 
Investigative  Division  of  the  F.B.I.)  at  your  hearings,  had  no  agents  assigned  to  the  Indian 
reservations. 

I  know  some  will  argue  that  many  of  these  s  frious  situations  took  place  before  the 
enactment  of  the  1988  Indian  Gaming  Act.  However,  as  I  am  sure  you  are  aware,  the 
Inspector  General  of  the  National  Indian  Gaming  Commission  recently  reported  that  the 
1988  Act  is  not  being  enforced. 

Consequently,  there  is  every  reason  to  believe  that  organized  crime  involvement  in 
Indian  casinos  will  continue  until  government  regulation  and  oversight  is  put  in  place  to 
insure  the  integrity  of  those  individuals  involved  in  Indian  gaming,  and  until  Indian 
reservations  are  subject  to  the  same  Banking  Secrecy  and  Currency  Transaction  regulations 
and  taxation  that  the  rest  of  the  casino  industry  in  the  rest  of  the  United  States  are  subject 
to. 


Sincerelv 


Donald  J.  Trump 


194 


APPENDIX  TO  MEMORANDA  DATED  2/24/93: 

General  comments  in  the  media  regarding  the  lack  of 
effective  law  enforcement  efforts  to  prevent  organized 
crime  infiltration  of  Indiem  gaming  operations. 

Specific  examples  of  organized  crime  infiltration  into 
Indian  geuning  operations:  media  reports 


Exhibit  A 
Exhibit  B 
Exhibit  C 
Exhibit  D 
Exhibit  E 
Exhibit  F 
Exhibit  6 


Los  Angeles  Times  10/08/91 
Los  Angeles  Times  10/07/91 
San  Francisco  Chronicle  9/05/91 
New  Jersey  Law  Journal  9/13/93 
U.S.  News  and  World  Report  8/23/93 


Proprietary  to  the  United  Press 
International  1/27/92 


Star  Tribune 


7/04/93 


195 


6TH  STORY  Of  Level  1  printed  in  FULL  format. 

Copyright  1991  The  Times  Mirror  Company 
Los  Angeles  Times 

October   8,  1991,  Tuesday,  Home  Edition 

SECTION:  Part  A;  Page  1;  Column  5;  Metro  Desk 

LENGTH:  3667  words  ' 

HEADLINE:  TRIBE  HITS  JACKPOT  WITH  ITS  GAMBLING  OPERATION; 

INDIANS:  LED  BY  WELFARE  MOTHER,  CLAN  MEMBERS  TAKE  BACK  BUSINESS  FROM  OUTSIDERS 

AND  TRANSFORM  THEIR  LIVES. 

SERIES:  THE  INDIAN'S  GAMBLE:  Tribal  Economies  Are  Banking  on  a  Billion-Dollar 
Gambling  Industry.  Third  in  a  five-part  series.  Next:  Amid  confusion  among 
regulators,  tribes  embrace  slot-type  gambling  machines. 

BYLINE:  By  PAUL  LIEBERMAN,  TIMES  STAFF  WRITER 

DATELINE:  SYCUAN  RESERVATION,  Calif. 

BODY : 

Anna  Sandoval  remembers  the  low  point  as  the  day  she  trudged  10  miles  to  El 
Cajon,  a  Mission  Indian  on  welfare  looking  for  milk  for  her  five  children. 
Passing  the  wooden  shacks  with  outhouses  on  the  rocky  hillsides  of  her 
reservation,  she  prayed  for  deliverance  of  her  people. 

"I  said,  'God,  what  can  you  do  to  help  us?'  "  she  recalled. 

Two  decades  later,  when  the  bingo  came,  the  first  thing  she  did  was  build  a 
new  church. 

Then  came  the  houses.  Sprouting  on  the  hillsides  were  29  Spanish-style  home 
rivaling  those  of  any  suburban  subdivision. 

Built  nearby  were  a  health  clinic  and  firehouse  designed  to  save  lives  of 
Indians  and  non-Indians  alike  throughout  the  Dehesa  Valley  in  eastern  San  Dieg 
County. 

And  last  November,  Sandoval  --  by  then  a  fixture  as  tribal  chairman  — 
dedicated  a  new  68 , 000-square-foot  Sycuan  Gaming  Center,  a  sparkling  complex 
reminiscent  of  the  Vegas  Strip  with  a  1,500-seat  bingo  parlor,  520-seat 
off-track  betting  "theater"  and  sunken  3  5-table  poker  area  overlooked  by  a 
restaurant,  bar  and  gift  shop. 

Sycuan  --  a  square  mile  of  wasteland  where  the  government  dumped  a  few  Indi; 
families  a  century  ago  --  had  become  one  of  the  great  success  stories  of  Indiai 
gambling,  up  there  with  the  San  Manuel  band  in  San  Bernardino,  the  Seminoles  ii 
Florida  and  the  Shakopee  Sioux  in  Minnesota. 

There  is  a  grim  underside,  to  be  sure,  to  the  industry  that  in  one  decade  h. 
come  to  dominate  Indian  economies:  reservations  left  with  empty  bingo  halls, 
victimized  by  Mafia  infiltration,  devastated  by  internal  battles.  For  the 
majority,  the  alluring  promise  of  gambling  has  not  been  realized.  It's  been  a 
marginal  moneymaker,  an  occasional  source  of  jobs  and  trickle  of  profits. 


196 


1991  Los  Angeles  Times,  October  8,  1991 

But  some  have  prospered.  In  California,  for  example,  gambling  has  brought 
clear  economic  gains  to  a  half  dozen  of  the  state's  96  Indian  communities. 

Reservations  once  derided  as  blights  on  the  surrounding  area  now  hire  their 
non-Indian  neighbors.  Tribes  that  once  looked  for  charity  hand  it  out.  Familie 
that  lacked  indoor  plumbing  have  satellite  dishes  in  their  back  yards. 

Even  more  significant,  perhaps,  are  the  changed  lives:  Philip  Knight  freed 
from  picking  sugar  beets  to  become  full-time  chief  executive  of  the  Rumsey 
Rancheria;  the  children  at  San  Manuel  rejoicing  at  receiving  bonuses  for  good 
grades  from  kindergarten  through  college;  and  John  Welmas,  once  sinking  into 
cocaine  addiction,  now  sober  and  running  a  $400 , 000-a-year  business  feeding 
gamblers  at  the  Cabazon  Reservation. 

"If  it  wasn't  for  the  bingo,"  he  said,  "I  probably  wouldn't  be  around  today 

Why  have  some  reservations  made  it  while  others  have  become  casualties? 

A  prime  location  never  hurts  —  proximity  to  a  Minneapolis  or  San  Diego.  Go 
management  is  a  must.  But  equally  essential  is  political  stability,  particular 
leadership  able  to  maneuver  around  the  trapdoors  that  doom  many  tribes. 

This  was  difficult  to  find  in  California,  where  Indians  were  scattered  on 
small  plots.  Few  groups  had  the  traditions  of  strong  government  seen  among  the 
great  Indian  nations  elsewhere. 

While  the  Oklahoma  Creeks  had  a  two-house  legislature  and  volumes  of  tribal 
law,  politics  here  was  of  the  extended  family  variety.  One  clan  battled  anothe 
for  control  of  sewer  hookups,  housing  funds  —  or  bingo  profits.  Unscrupulous 
promoters  could  play  one  faction  against  another,  offering  gifts,  jobs  or  cash 

"It's  much  like  if  you  feed  fish,"  said  David  W.  Pen,  a  Bodega  Mi-Wok  who 
teaches  anthropology  at  Cal  State  Sonoma.  "If  you  have  a  small  area  and  throw 
a  crumb,  the  crumb  disappears  quickly.  And  what  you  have  is  people  after  each 
other  in  the  hope  that  the  crumb  is  still  there." 

"Infighting,  power  and  greed,"  was  the  way  Anna  Sandoval  put  it.  "You  put 
them  all  together  and  they'll  destroy  you." 

They  never  destroyed  her.  But  after  she  wound  up  in  the  grandest  home  in 
Indian  country,  a  Cadillac  in  the  driveway,  they  did  put  a  bittersweet  ending 
what  should  have  been  her  moment  of  triumph. 

Sycuan  (pronounced  SICK  —  wan) ,  needed  crumbs  —  anything  —  when  she  was 
elected  chairman  in  1972.  A  short,  stout  woman  with  an  air  of  confidence,  she 
became  the  undisputed  leader,  the  object  of  "a  mother  complex  or  whatever,"  sa 
Jim  Trant,  the  non-Indian  development  expert  she  brought  in  as  a  consultant  in 
1983. 

Even  then,  the  reservation  remained  "largely  neglected,"  a  government  surve- 

said.  The  average  adult  had  a  sixth-grade  education.  The  only  ccnmunal 

structures  were  a  century-old  Catholic  church,  reflecting  their  heritage  as 

Kumeyaay  Mission  Indians,  and  a  cinder-block  meeting  hall. 


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1991  Los  Angeles  Times,  October  8,  1991 

The  bingo  hall  would  dwarf  those.  It  was  proposed  in  1983  by  Pan  American 
International,  a  company  that  ran  one  of  the  pioneering  Seminole  halls  in 
Florida  and  was  looking  to  branch  out  to  reservations  coast  to  coast. 

When  tribe  members  worried  about  the  influx  of  strangers,  Sandoval  suggeste 
a  construction  site  in  a  corner  of  the  reservation  —  which  happened  to  fall  9 
on  her  property  and  that  of  another  member.  "I  said,  'We  can  put  it  on  my  land 
"  she  recalled. 

She'd  get  a  larger  share  of  the  hassle  —  traffic  right  by  her  home  —  but 
also  of  the  rental,  which  was  based  on  profits.  If  the  place  prospered,  so  wou 
she.  "They  got  mad  about  it  later,"  she  said  of  her  fellow  Indians. 

At  the  time,  however,  who  knew  what  would  become  of  bingo?  Worried  it  could 
disappear  any  day,  Sandoval  rolled  tortillas  in  her  kitchen  and  sold  them  to  t 
players. 

Indeed,  it  was  no  overnight  success. 

Within  a  year,  the  hall  was  raided  by  San  Diego  County  sheriff's  deputies, 
who  said  an  upstairs  lounge  featured  illegal  casino  games.  Court  decisions  had 
affirmed  Indians'  right  to  offer  high-stakes  versions  of  any  gambling  legal  in 
state  —  then  basically  bingo  and  poker  in  California.  At  Sycuan,  though,  a  ga: 
dubbed  "bingo-jack"  was  being  played  at  what  were  "obviously  blackjack  tables, 
then-Sheriff  John  Duffy  declared. 

As  late  as  1987,  testifying  before  the  U.S.  Senate  Select  Committee  on  Indi 
Affairs,  Duffy  distributed  photos  of  "dilapidated  conditions"  at  Sycuan  to 
illustrate  the  failure  of  Indian   gambling.  "Reservations   themselves  .  .  .  ha' 
not  profited,"  he  said. 

Sandoval  was  hearing  similar  criticism  from  her  people. 

Tribe  members  received  only  small  payments,  $300  in  the  summer  and  at 
Christmas.  "They  promised  us  a  lot  of  things,  and  I  haven't  seen  nothing  yet," 
one  elder  griped. 

The  problem,  Trant  said,  was  that  while  the  tribe  was  supposed  to  get  55%  o 
the  net,  Pan  Am  reported  little  profit. 

There  was  grumbling  from  another  direction  as  well.  An  Indian  activist  from 
Arizona,  Dineh  Eagle,  rallied  six  elders  to  write  their  congressman  asking  to 
have  "our  reservation  restored  to  our  old  ways."  They  accused  Sandoval  of  bein 
part  of  "a  money  oriented  cligue"  ruining  the  place. 

Elsewhere,  such  factionalism  was  paralyzing.  Here,  Sandoval  obtained  a  cour- 
order  barring  Eagle  from  the  reservation.  "She  was  just  stirring  them  up,"  the 
chairwoman  recalled. 

"Anna?  If  she  likes  you  she's  a  great  person.  If  she  doesn't  like  you,  stay 
out  of  her  way,"  said  Kenny  Meza,  then  chairman  of  the  nearby  Jamul  Reservatioi 

By  the  end  of  1987,  Sycuan  made  its  big  move:  Declaring  Pan  Am  in  violation 
of  a  tribal  licensing  ordinance,  the  Tribal  Council  ordered  the  company  off  tht 
reservation. 


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1991  Los  Angeles  Times,  October  8,  1991 

While  the  action  was  fought  in  court,  Sycuan  eventually  prevailing,  tribe 
members  ran  the  bingo  themselves  —  profitably.  "The  next  month  ...  we  had 
about  $300,000  to  distribute,"  Trant  said. 

In  1989,  Sycuan  was  among  the  first  reservations  to  take  advantage  of  the 
national  Indian  Gaming  Regulatory  Act  by  negotiating  a  "compact"  with  the  stat 
to  add  off -track  betting  to  its  mix  of  games. 

To  direct  the  expansion,  Sycuan  didn't  pick  the  promoters  regularly  making 
pitches  to  Indians.  Trant  found  an  Arizona-based  partnership.  First  Astri  Corp 
whose  background  was  in  real  estate  and  entertainment. 

Whereas  some  tribes  allowed  outside  managers  to  hand  them  prof it-and- loss 
statements,  Sandoval  insisted  the  Indians  count  the  chips  themselves. 

"When  they  come  in  and  say  'We  want  to  help  you,  do  this  for  you,'  that's 
bull,"  she  said.  "They're  here  for  money,  not  because  they  want  to  help  the 
Indians. " 

This  year,  with  $30  million  in  betting  on  horse  races  alone,  the  tribe 
expects  to  clear  $4  million.  But  that  estimate  is  conservative  —  the  Indians 
received  a  check  for  $600,000  one  month  recently. 

The  Sycuan  Gaming  Center  bears  little  resemblance  to  unadorned  aluminum  or 
cinder-block  bingo  halls  elsewhere.  It  has  a  Southwest  look,  sand-colored  with 
peach  accents,  and  an  entryway  with  skylights  and  mirrored  ceiling.  You  drive 
and  a  valet  parks  your  car. 

People  start  coning  at  9:30  a.m.  for  "Wake  Up  Action  Bingo."  There's 
"matinee"  bingo  also,  then  conventional  evening  sessions. 

While  women  are  the  mainstay  of  bingo,  men  are  drawn  by  the  plush  poker 
parlor  and  off-track  betting.  Showing  races  on  a  20-foot  screen,  the  casino  dr 
$150,000  in  bets  for  the  Kentucky  Derby  alone,  the  tribe  keeping  2.3%  of  the 
handle. 

With  600  workers,  Sycuan  is  one  of  the  largest  employers  in  east  San  Diego 
County.  And  with  nearly  1  million  visitors  expected  this  year,  marketing 
director  Fritz  Opel,  a  former  Disney  executive,  has  a  motto:  "Why  go  to  Vegas 
when  you  can  cone  out  to  Sycuan?" 

For  years,  the  Indians  were  the  objects  of  complaints  about  run-down 
conditions,  drunkenness  and  the  like. 

Their  problems  with  the  surrounding  community  are  very  different  when  they 
run  the  most  successful  business  around. 

Now  neighbors  complain  about  traffic  and  overdevelopment.  Some  look  cynical. 
at  Indian  gambling  as  "people  trying  to  get  away  with  something,  rather  than 
accord  them  the  dignity  they  deserve  as  governments  trying  to  do  good  for  thei. 
people,"  said  Jerry  Levine,  attorney  for  the  San  Manuel  Reservation  in  San 
Bernardino  County. 

That's  why  the  Sycuan  Fire  Department  was  so  important.  With  an  ambulance, 
two  firetrucks  and  13  employees,  it  began  answering  calls  throughout  the 


199 


1991  Los  Angeles  Times,  October  8,  1991 

Dehesa  Valley,  where  residents  previously  might  wait  30  minutes  for  an  ambulan 
from  El  Cajon. 

"Had  the  tribe  offered  this  in  any  formal  manner  to  the  community,  it 
probably  would  not  have  been  accepted,  just  because  of  jealousy,  resistance," 
Trant  said. 

The  tribe  also  sponsors  a  Little  League  team  (the  Sycuan  Bandits)  and  bough 
computers  for  a  nearby  elementary  school . 

Other  bands  similarly  have  learned  the  art  of  public  relations.  The  Seminol 
have  made  campaign  contributions  to  Florida  state  legislators  and  given  bingo 
proceeds  to  Jerry  Lewis'  muscular  dystrophy  telethon.  The  Shakopee  Sioux  gave 
$78,000  to  blacktop  a  road  in  nearby  Prior  Lake,  Minn. 

But  the  Shakopee  chairman,  Leonard  Prescott,  is  one  of  many  tribal  official 
under  pressure  to  use  gambling  revenues  —  first  and  foremost  —  to  take  care 
public  relations  at  home. 

Prescott  faces  tumultuous  reservation  politics.  After  disputes  with  a  rival  I 
faction  escalated  into  fighting  at  one  meeting,  he  hired  20  off-duty  policemen  ■ 
to  keep  peace.  I 

So  while  the  Shakopees  have  put  in  new  sewers  and  homes,  Prescott  uses  65%  i 
the  gambling  profits  to  keep  constituents  happy.  Some  families  receive  $80,000  | 
year. 

Host  Indian  leaders  agree  that  such  "per  cap"  payments  are  not  ideal  use  of  i 
the  money  because  the  community  may  be  left  with  few  permanent  improvements.   j 

"Politically,  it's  a  real  temptation,"  said  Jana  McKeag,  an  Oklahoma  Cherok  \ 
recently  appointed  to  the  Indian  Gaming  Commission.  "But  it's  short-term." 

At  Sycuan,  Sandoval  felt  secure  enough -to  take  the  long-term  view. 

Only  30%  of  the  tribe's  revenue  is  "per  capped,"  adults  in  the  96-member    ! 
tribe  getting  $6,000  a  year.  Another  25%  goes  into  trust  funds  and  insurance  -  ■ 
full  health  and  $250,000  life  policies  for  everyone.  The  rest  is  used  for 
reservation  projects. 

The  houses  were  a  startling  contrast  to  the  boxlike  government  homes  seen  o  • 
most  reservations.  "We  wanted  something  better,"  said  tribal  Vice  Chairman  Han  ; 
Murphy,  who  got  a  2 , 600-square-foot  home  with  a  "million-dollar  view."         ; 

Now  Sycuan  is  one  of  the  few  tribes  —  "the  real  smart  ones,"  noted  gamblin  | 

expert  I.  Nelson  Rose  —  using  gambling  to  rise  above  it.  It's  looking  to  inve  I 

profits  in  businesses  that,  unlike  gambling,  won't  be  subject  to  whims  of  cour  • 

or  state  legislatures,  and  that  won't  attract  the  shady  outsiders  drawn  to  j 

casinos.  ! 

On  the  drawing  board  is  an  all-suite  hotel  to  capitalize  not  only  on  j 

gamblers,  but  golfers  using  Singing  Hills  Country  Club  up  the  road.  Also  planni  ! 

is  a  $7-million  senior  citizens  housing  project,  whose  283  units  will  be  rentei  j 

mostly  to  non-Indians,  Trant  said.  L 


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1991  Los  Angeles  Times,  October  8,  1991 

There's  talk  as  well  of  a  vineyard  to  produce  wine  —  with  the  Sycuan  label 
of  course. 

In  Florida,  the  Seminoles  already  have  invested  in  land,  an  orchard  and  a 
hotel. 

In  Indio,  the  tiny  Cabazon  band  is  partner  in  a  SlSO-million  plant  to  produ 
power  from  agricultural  waste  and  has  plans  for  a  1,300-home  real  estate  tract  : 

Cabazon,  which  had  to  survive  organized  crime  infiltration  in  the  early  198  ; 

and  still  suffers  from  fierce  internal  feuds,  has  not  made  Sycuan' s  gambling  j 

profits  and  only  months  ago  paved  its  first  road.  But  the  new  projects,  joint  | 
ventures  with  outside  investors,  would  be  impossible  if  the  tribe  had  not 

managed  to  keep  its  bingo  and  card  room  going,  according  to  Mark  Nichols,  | 

Cabazon' s  non-Indian  chief  executive  officer.  | 

"We  had  to  be  established  as  a  fighting  entity,"  Michols  said.  "Without  '; 
gambling  revenue,  (the  Indians)  would  not  be  dealing  from  a  position  of  j 
respect. "  i 


Cabazon  has  big  plans  for  its  gambling  facilities,  too.  It  hopes  to  expand 
55,000  square  feet,  one  of  several  tribes  looking  to  challenge  the 
king-of-the-hill  status  held  by  the  Sycuan  facility  unveiled  last  November. 

"Sycuan  is  the  model,"  said  the  manager  of  another  nearby  Indian  gambling 
hall.  Agreed  George  Forman,  a  former  government  attorney  who  works  vith  many 
tribes:  ''It's  what  Indian  gaming  should  be." 

But  just  two  weeks  after  the  grand  opening,  events  took  a  turn  for  Sycuan' s 
matriarch. 

Last  Dec.  10,  Sandoval's  reign  as  chairman  ended  in  a  shocking  election 
upset.  Dan  Tucker,  then  vice-chairman,  beat  her  by  three  votes. 

Tucker  declared  his  win  a  mandate  for  "more  working  together." 

"Anna,"  he  noted,  "did  a  lot  of  stuff  on  her  own." 

He  is  of  a  new,  more  assimilated  generation.  Just  39,  he  rose  from  box  boy 
become  manager  of  a  Ralphs  supermarket.  Whereas  Sandoval  likes  to  travel  to 
traditional  Indian  pow-wows,  his  hobbies  are  playing  golf  and  attending  footba 
games. 

While  Tucker  pledged  to  turn  the  old  church  into  a  museum  to  "our  heritage, 
no  one  mistook  him  for  anything  other  than  a  modern-day  managerial  sort. 

Another  of  his  projects?  He'd  like  the  Sycuan  Band  of  Mission  Indians  to 
sponsor  a  golf  tournament  at  Singing  Hills  Country  Club. 

Anna  Sandoval  knew  she'd  alienated  some  tribe  members  by  running  things  "wi 
an  iron  hand."  But  she  couldn't  hide  the  hurt. 

"I  don't  know  if  they  appreciated  what  I  did,"  she  said.  "No  one  has  ever 
come  to  me  and  said  'Thank  you,  Anna.'  " 


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1991  Los  Angeles  Times,  October  8,  1991 

She  retreated  to  her  new  hone.  Dubbed  the  "house  on  the  hill,"  it  was  the 
talk  of  reservations  hundreds  of  miles  away,  with  its  imposing,  tower-like  frc 
—  a  kiva,  actually,  a  round  room  for  meditation  or  prayer. 

She  hardly  left  office  empty-handed:  The  rent  for  use  of  her  land  and  pensi 
from  her  chairman's  job  total  well  over  3100,000  a  year,  according  to  tribal 
officials.  Outside  the  land-rich  Agua  Caliente  in  Palm  Springs,  she  may  be  the 
wealthiest  Indian  in  California. 

But  the  onetime  welfare  mother  wondered  whether  it  all  was  worth  it. 

While  her  new  microwave  worked  fine,  she  sometimes  found  herself  thinking, 
"Boy,  it  would  be  nice  to  have  a  wood  stove." 

She  thought  back  to  the  old  days,  when  Sycuan  survived  on  fried  bread  and 
acorn  mush.  While  it  was  hard  to  be  an  Indian  then,  you  felt  free  on  the  "res. 
There  wasn't  all  this  materialism.  All  this  commotion. 

She  wasn't  about  to  give  up  the  money,  of  course,  nor  the  house,  nor  the 
Cadillac.  But  a  thought  came  to  her:  "You  have  to  give  up  something  to  get 
something. " 

Indian  Gambling  in  California 

Two  dozen  of  California's  96  reservations  and  tiny  rancherias  have 
experimented  with  gambling,  producing  several  showplaces  of  industry  —  and  so 
of  its  worst  scandals,  including  two  unsolved  murders. 

1)  BARONA  RANCHERIA,  San  Diego  (County)  :  Bingo  manager  Stewart  Siegel  was 
caught  fixing  games  in  1986,  then  admitted  being  a  front  for  organized  crime. 
The  current  management  firm  is  headed  by  Emmett  F.  Munley,  who  twice  failed  tc 
get  a  license  from  the  Nevada  Gaming  Control  Board. 

2)  BISHOP  RANCHERIA,  Inyo:  Bingo  is  played  twice  a  week  in  a  125-seat  hall. 
"It's  just  nip  and  tuck,"  a  tribal  official  said. 

3)  CABAZON  RESERVATION,  Riverside:  A  poker  room  was  managed  in  1980  by 
reputed  organized  crime  figure  Rocco  Zangari.  In  May  1981,  tribe  vice  presiden 
Fred  Alvarez  began  complaining  that  "money  was  being  skimmed,"  according  to  th 
state  attorney  general's  office.  Soon  after,  Alvarez  and  two  friends  were  shot 
dead  —  a  crime  never  solved.  Fired  by  the  tribe  that  November,  Zangari  accuse 
Cabazon's  non-Indian  administrator,  John  Nichols,  of  obtaining  "fictitious 
salaries"  from  gambling.  In  1985,  Nichols  was  sentenced  to  four  years  in  priso 
for  trying  to  hire  an  undercover  policeman  to  serve  as  a  hit  man  in  an  unrelat 
incident.  Cabazon  now  offers  card,  bingo,  off-track  betting  and  "pull-tab 
machines."  Tribal  officials  insist  Alvarez'  murder  was  unrelated  to  gambling. 

4)  CHICKEN  RANCH,  Tuolumne:  In  1984,  Mi-Wok  activist  Karl  Mathiesen 
re-established  a  tiny  rancheria  so  an  outside  firm  could  open  a  bingo  hall. 
While  he  soon  had  a  gold-grille  Cadillac,  he  complained  that  the  Indians  were 
not  given  fair  profits.  On  Nov.  15,  1987,  an  arson  fire  swept  through  the  shac 
where  he  lived,  incinerating  him.  There  were  no  arrests,  or  proof  the  crime  wa 
tied  to  gambling.  But  "someone  wanted  him  very,  very  dead,"  said  Deputy  Atty. 
Gen.  Rudolf  Corona  Jr. 


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1991  Los  Angeles  Times,  October  8,  1991 

5)  COLUSA  RANCHERIA,  Colusa:  A  1,200-seat  bingo  hall  has  funded  constructior 
of  four  homes.  The  tribe  runs  the  business  itself,  rather  than  rely  on 
outsiders,  because  "we  know  the  way  the  world  is,"  an  official  said. 

6)  FORT  YUMA  RESERVATION,  Imperial:  "Snowbird"  tourists  who  fill  area  traile 
parks  in  winter  generate  $500,000  in  yearly  bingo  profits  for  2,200  Quechan 
Indians. 

7)  HOOPA  VALLEY  RESERVATION,  Humboldt:  A  600-seat  bingo  hall  has  "never 
turned  a  profit,"  a  tribal  official  said. 

8)  JACKSON  RANCHERIA,  Amador:  Reputed  Florida  crime  figure  James  L.  Williams 
managed  bingo  in  1985  after  contracting  to  pay  $300,000  to  a  local  man  who 
financed  the  hall.  "I  was  very  dumb,"  the  businessman  said,  complaining  in 
Amador  Superior  Court  that  Williams  paid  him  nothing,  skimmed  profits,  then 
left.  The  hall  reopened  this  summer. 

9)  LONE  PINE  RANCHERIA,  Inyo:  Elders  play  bingo  once  a  month.  The  "crowd?" 
About  25  elders. 

10)  MORONGO  RESERVATION,  Riverside:  The  tribe  in  1984  sued  an  outsider  for 
running  unauthorized  bingo  on  one  member's  land.  Testimony  disclosed  that  two 
reputed  crime  figures  —  Zangari  and  Tommy  Marson  —  sometimes  hung  out  at  his 
hall.  The  tribe  now  offers  bingo,  off -track  betting  and  gambling  machines.  In 
1989,  a  local  grandmother  won  $500,000  here  playing  MegaBingo,  a  televised  gamt 
beamed  to  reservations. 

11)  PIT  RIVER  TRIBE,  Shasta:  Weekly  bingo  with  $30  prizes  in  a  74-seat  room. 
"It's  just  for  fun,"  a  tribe  member  noted. 

12)  RESIGHINI  RANCHERIA,  Del  Norte:  A  failed  bingo  hall  is  used  as  a 
lunchroom  by  elders. 

13)  RINCON  RESERVATION,  San  Diego:  FBI  wiretaps  detailed  the  Chicago  mob's 
plot  to  take  over  the  bingo  hall,  now  closed. 

14)  ROBINSON  RANCHERIA,  Lake:  On-and-off  bingo  has  prompted  lawsuits  among 
investors  and  the  tribe.  The  FBI  seized  slot-type  gambling  machines  in  Februar> 

15)  RUMSEY  RANCHERIA,  Yolo:  Bingo  liberated  the  Indians  here  from  grueling 
farm  labor.  But  a  former  tribal  secretary  is  awaiting  trial  on  tax  charges  for 
allegedly  fleeing  to  Nevada  with  a  Rolls  Royce  and  $400,000  in  proceeds. 

16)  SAN  MANUEL  RESERVATION,  San  Bernardino:  A  15-family  tribe  went  to  court 
to  oust  its  first  management  firm,  then  established  the  most  profitable  bingo 
hall  in  the  nation,  seating  2,600  players.  Tribe  members  have  new  homes  and  a 
scholarship  fund  rewards  children  for  good  grades  from  kindergarten  through 
college. 

17)  SANTA  ROSA  RANCHERIA,  Kings:  Bingo  has  financed  a  recreation  center,  pa> 
tribal  bills  and  provides  small  "per  cap"  payments  to  400  tribe  members:  adults 
get  $27  and  kids  $18  per  month. 

18)  SANTA  YNEZ  RESERVATION,  Santa  Barbara:  Even  the  backing  of  singer  Wayne 
Newton  could  not  overcome  a  remote  location.  A  1,800-seat  bingo  hall  now  is 


203 


1991  Los  Angeles  Times,  October  8,  1991 
closed. 

19)  SOBOBA  RESERVATION,  Riverside:  Bingo  is  closed  —  for  the  fifth  time.  0 
management  firm  was  found  to  have  embezzled  $252,000.  Another  included  a 
fugitive  from  the  French  Connection  heroin  case.  "I  think  a  lot  of  the  tribes 
rely  too  much  on  bingo,"  Chairman  Robert  Salgado  said. 

20)  SYCUAN  RESERVATION,  San  Diego:  "Sycuan  is  the  model,"  a  rival  says 
matter-of-factly.  The  showplace  of  Indian  gambling. 

21)  TABLE  MOUNTAIN,  Fresno:  A  tribal  chairman  was  recalled  "because  we 
couldn't  get  (bingo)  money  ...  to  divide,"  the  leader's  brother  noted.  Now 
adult  tribe  members  get  $200  monthly  from  televised  MegaBingo  games. 

22)  TRINIDAD,  Humbolt:  A  600-seat  bingo  hall  financed  a  new  roof  for  the 
tribal  building. 

23)  TWENTY-NINE  PALMS  RESERVATION,  San  Bernardino:  Wiretaps  in  1987  overhea 
mobster  Chris  Petti  discussing  a  possible  hotel-casino  here,  but  the  deal  neve 
materialized.  The  tribe  now  has  a  request  for  a  gambling  "compact"  pending 
before  the  state. 

24)  VIEJAS  RANCHERIA,  San  Diego:  A  casino  will  open  soon.  "They  were  hoping 
for  something  better  than  (gambling),"  a  tribal  adviser  said,  but  "there  were 
not  business  opportunities  other  than  that." 

GRAPHIC:  Photo,  Anna  Sandoval  in  her  hillside  home  built  from  gambling  profits 
;  Photo,  Entrance  of  Sycuan  reservation's  gambling  hall  rivals  Las  Vegas.  ; 
Photo,  Gamble  Pays  Off:  An  Indian  tribe  in  eastern  San  Diego  County  hit  the 
jac)cpot  with  its  gambling  operation.  Led  by  Anna  Sandoval,  above  in  front  of  h 
adobe  home,  the  Indians  took  back  the  business  from  outsiders  and  transformed 
their  lives.  Part  three  of  a  five-part  series.   BARBARA  MARTIN  /  Los  Angeles 
Times;  Photo,  Enunett  Munley  ;  Photo,  Karl  Mathiesen  ;  Photo,  James  Williams  ; 
Photo,  Wayne  Newton  ;  Photo,  Robert  Salgado  ;  Map,  California,  JUAN  THOMASSIE 
Los  Angeles  Times 

TYPE:  Series;  Infobox;  List 

SUBJECT:  AMERICAN  INDIANS  —  SAN  DIEGO  COUNTY;  GAMBLING  —  SAN  DIEGO  COUNTY; 
BINGO;  INDIAN   RESERVATIONS;  GAMBLING   —  CALIFORNIA;  AMERICAN  INDIANS  — 
CALIFORNIA 


204 


PACI      23 

15TE  STORY  df  L«v«l  1  printid  in  FULL  fonat. 

copyright  1991  Tb«  ?!&••  Mirror  Coapany 
Lo«  Ang*l«a  Tiaca 

Ootobar  7,  1991,  Monday,  Bob*  Mltlon 

8ECTXOH1  Part  A:  Paga  1;  Celuan  li  Matre  Daak 

LKMQTK:  4716  words 

HEXOLIKZi  HOW  THZ  MAPI  A  TAKGZTED  TRIBS'B  GANBLZKO  BUSINESS; 

CHIME  I  THE  MOB  DROPPED  BIO  TO  XNFZLTRATE  SANSS  KSAS  SAM  DXEOO,  BOT  WIRETAPS 

SUGGEST  TIES  TO  OTHER  RESERVATIONS. 

SERIES:  THE  INDIAN'S  0AXBI2:  Triisal  Econoalaa  Ara  Banking  on  a  Billion-Dollar 
Gaabling  Industry.  Sacond  in  a  flva-part  sariaa.  Naxtt  Presparity  aammm   to  tha 
rocky  wasteland  ^ars  tha  govamaant  a  cantury  ago  dumped  a  handful  of  Indiana. 

BYLINE I  By  PAUL  LIEBERMAN,  TIMES  STAFF  WRITER 

body: 

Chris  Petti  got  the  good  news  three  days  before  Christmas,  1987:  His  aove 
to  taks  over  gaabling  on  the  Rincon  Reservation  bad  been  approved  at  the  very 
top  of  the  Chicago  Mafia. 

"They  wanna  go  with  that  thing,"  Nike  Caracci  told  hia.  "They  wanne  get  a 
foothold  down  where  you're  at." 

The  call  followed  a  faailiar  pattern.  Caracci  rang  Petti 's  San  Diego  hoae 
and  gave  hia  a  nuBber.  Petti  hurried  across  the  street,  to  a  pay  phone  outside 
a  7 -Eleven,  and  dialed  it. 

Noaants  later,  Caracci  was  telling  hia  froa  Chicago  how  the  acting  boas 
there,  Saa  carllsi,  had  given  the  crucial  OX.  "He  said,  '(Expletive)  it,  let's 
go,  do  it,  do  it.'  " 

Petti,  the  criae  faaily's  top  contact  in  Southern  California,  had  been 
working  toward  this  aoaent  for  a  year.  He  bad  nurtured  a  tribe  aeaber  to  grease 
tha  wfaaela  on  the  reservation.  He  had  found  a  front  man  whose  naae  could  be  sent 
to  the  Bureau  of  Indian  Affaire.  And  he  had  endured  the  frustrations  of  dealing 
with  the  Indians,  their  changing  demands,  faaily  sguabbls*  and  tha  sxispicious 
questions  of  one  stubborn  wonan  on  the  Rinoon  Tribal  Council. 

But  now  that  Chicago  was  on  board,  he  figured  on  making  a  fortune  with  bingo, 
cards  and  off-track  betting  on  the  remote  reservation  in  Northern  San  Diego 
County. 

Only  one  thing  could  mess  up  the  deal,  Caracci  cautioned  hia. 

"The  O.C.  label,"  Petti  replied. 

"You  gotta  really  be  careful,"  Caracci  said. 

FBI  organised  criae  agents  logged  the  call  at  8:33  a. a.  They  had  been 
aaveadropping  on  Petti   for  six  months. 


205 


PABB       34 

1991  Lo8  An9dl«t  Tiiu,  October  7,  1991 

A  veteran  of  the  cops-end-robbers  9aae,  h«  thou9ht  ha  vaa  ■■£•  doing  buainase 
from  37  pay  phonu  around  San  Olago.  Ha  hadn't  oountad  on  a  naw  federal  "roving 
wiretap"  law  that  eapoverad  agcnta  to  aonltor  a  aeriea  of  phonea  used  by  a 
auspect. 

Tbouaanda  of  pagea  of  wiretap  reporta  would  docunent  tbe  CHloago  Bob'a<  aove 
to  infiltrate  the  Rinoon-Keaervationr  show  oollaboration  with  aob  faailie* 
acroaa  the  co^ttY.^and-auggeat-organiged  nrlwe  t1aa_to_other  reaarvationai  aa 
well. 


To  thia  day,  govemaent  offloiala  and  Indian  laadera  generally  bellttlla  the 
threat  poaed  by  organised  crine  to  the  gaobling  that  haa  become  the  ll-blllion 
oenterpieoe  of  tril»«l  econoaiea.  They  diaaiaa  warnings  of  aob  Intereat  aa 
paranoia  or  the  raatlnga  of  people  trying  to  infringe  on  Indian  profita. 

But  thoae^offlciale  probably  never  heard  of  the  Rincon  wiretapa  —  there  was 
no  prosecution  to  bring  tbea  to  light.  After  two  yeara  of  plotting,  the  Chicago 
criaa  faaily  lost  intereat  in  the  reeervation.  The  FBI,  in  turn,  ahifted  its 
efforts  to  Petti '•  involveaent  in  a  juicy  aoney-laundering  case. 

Lost  in  the  shuffle  were  wiretape  that  are  a  primer  in  how  tbe  aob  can  gat  a 

foot  In  the  door  of  gaabling  halls,  and  how  it  counts  on  akiaaing  and  laa 

overaight  to  eheatltribea  out  of  revenue  aorely  needed  by  aoae  of  the  poqreat 
people  in  Aaerica. 

Aa  Chris  Petti i  put  it  to  his  aain  Indian  contact i  "Let's  grab  soae  money, 
pal.-  t  i 

The  promise  of  gambling  had  been  hard  to  resist  for  Indians  throughout 
California.  i 

They  had  no  vast  ancestral  lands  with  natural  resources  euch  as  tiabexr  or 
ainerals.  Displaced  by  Spanish  missions,  miners  and  other  white  settlsrs,i  thsy 
wound  up  on  96  small  reservations  or  postage-stamp  "ranoherias*  in  the  desert  or 
mountains.  "Pushedi  into  the  rocka,"  an  anthropologiet  teraad  it. 

Rincon  was  one  of  the  aore  scenic,  set  in  a  valley  surrounded  by 
brush-covered  hillS.  Only  a  third  of  its  3,075  acres  was  flat,  however,  and  the 
land  could  barely  support  light  faming,  grazing  and  orchards. 

By  the  Bid-1980a,  unemployment  stood  at  60%  among  ths  300  Luiseno  Indians.  To 
make  ends  aeet,  eany  rented  aakeahift  houaing  to  migrant  worlcera,  setting  down 
ahac)cB,  garages  and  camper  sheila  on  the  duaty  landacape,  often  without 
plumbing. 

Tribal  leadera  didn't  waste  time  when  court  decieiona  gave  then  competitive 
advantages  first  ih  bingo,  then  other  games.  After  inviting  proposals  byioutsldo 
inveatore,  they  picked  Charles  Schlegel,  an  Orange  County  businessman  with  a 
theatrical  flair,  i 

He  built  a  33,000-sguare-foot,  spaniah-atyle  hall,  diatributed  buttone 
promoting  the  plaoe  and  hired  dozene  of  tribe  aeabera.  Then  he  sat  in  a  crow's 
neet  watching  the  Ceetivities,  smoking  a  cigar. 


206 


PACI   25 
1991  Lot  ;^«1m  TiBAt,  OCtob«r  7,  1991 

Old-tlBsrs  such  •■  Max  Natsattl  vara  thrlllad  to  halp  tally  tha  handlavhan 
tha  gaaaa  bagan  in  1984.  "Z  raaambar  ona  night  va  vara  counting,  $134,000  tha 
ona  nightl'  tba  70-yaar-old  Mastatti  racallad.  "Zt  vaa  raally  ■oaathlng  for 
Rinconl" 

Thara  waa  ona  problaB.  Tha  triba  law  no  profits. 

schlagal,  vho  ii  now  daad,  vas  cupposad  to  shara  any  profita  —  but  aaid 
thara  vara  nona.  Though  ha  had  takan  in  $10  million,  it  waa  iapoaaibla  to:  finiah 
in  tha  blaok,  ha  aaid,  trhlla  offarlng  tha  jackpots  naadad  to  cospata  vithi  other 
Indian  bingo  halls  opaning  around  tha  stats  —  ona  at  tha  Barona  Rasarvatlon, 
just  to  tha  south.  ' 

Ha  oloaad  Rlnoon's  ball  In  Juna,  198B.  A  sacond  sanagar  vaa  birad,  buti  alao 
raportad  no  profita.  Bafora  ha  laft  as  vail,  ha  addad  a  nav  attraction  in  lata 
1906,  a  card  rooa  vith  30  polcar  tables. 

That  Decaabar,  tha  rooa  was  raided  by  San  Dlago  County  sheriff's  deputies, 
who  said  it  was  offarlng  illegal  Chinese  variations  of  polcar.  To  triba  Baobars, 
it  asaoad  lilca  another  exaapla  of  prejudice  againat  than.  "They're  tryingi  to 
give  tha  Indiana  a  hard  tlsa,"  the  poker  aanagar  declared. 

Cbrla  Petti  waa  a  frsguant  viaitor  to  the  poker  parlor.  In  fact,  a  friend 
who  want  with  hia  aaid  ha  "actad  lUca  ha  waa  in  charge,"  according  an  affidavit 
filed  in  federal  court  in  San  Diego  by  FBI  agents  aeelcing  a  wiretap. 

The  FBI  had  baea  intsreatad  in  Vetti,   new  €4,  for  yeara.  Originally  fros 
Illinois,  be  had  surfaced  in  San  Diego  as  bodyguard  and  chauffeur  for  thai 
amiable  alder  statasaan  of  California  aobatars,  Frank  Boapensiero. 

When  "The  Boap"  was  gunned  down  in  1977,   Petti  stepped  in  to  fill  his 
shoes.  Ha  toon  had  his  own  live-in  chauffeur. 

A  tria  Ban  with  blow-dried  gray  hair,  ha  was  a  neat  dreaaer  —  Batching  hia 
tie  and  breast  hanAkerchief  —  and  a  follower  of  routinaa.  He  would  have  lunch 
on  Hotel  Circle  north  of  downtown,  than  apand  the  afternoon  at  the  Stardust 
Hotel  i   Country  Cltib,  whoso  staaa  rooa  sarved  aa  hia  unofficial  offies. 

Xvaluations  of  Petti'a  stature  in  the  Mafia  are  a  raaindar  that  such 
Intelligence  la  am  iaprecise  art.  One  survey  listed  hia  the  4Bth  aost  affluent 
BObtter  in  the  co«uitry,  but  Petti  laaanted  in  wiretapa,  "I 'a  in  bad  shape,* 
and  soae  downplayed  hia  as  a  "hangar-on,"  a  aan  of  Greek  extraction  (given  name 
Chris  Poulos)  trying  to  iapress  the  traditionally  Italian  eriae  faailies. 

He  had  convictions  in  San  oiego  for  bookmaking  and  for  using  a  baaeball  bat 
in  1979  to  aasault  a  aan  who  coaplained  about  a  noiay  party.  Quoted  ae  saying  he 
wanted  to  help  the  aan  "get  soae  sleep,"  Petti  waa  fined  $1,000. 

The  chance  to  get  a  handle  on  Pettl's  activities  fell  into  the  FBI'S  lap  in 
Auqust,  1986,  when  a  friend  naaed  Robert  Banjaain,  a  career  criainal  feeing  a 
bank  fraud  charge,  agreed  to  work  under  cover  for  agents. 

Petti  was  dealing  directly  with  the  boys  in  Chicago,  Bcnjaain  reported. 
Thair  inaediate  chare  wae  taking  over  accounts  of  recently  aurderad  Tony  (The 
Ant)  Spilotro,  vhO!  collected  a  "street  tax"  froa  bookaakars  throughout  Nevada 


207 


I  PACK   26 

!  1991  Loc  AngalM  TIbm,  October  7,  1991 

I 
uid  Southam  California.  But  Patti's  raal  paaaien  was  "tba  Rineon  Indian 
Raaaxvatien,"  accoi^din?  to  tba  affidavit. 

I 
Tba  kay  to  it,  ]|anjaain  said,  vat  Pattl'a  eleaa  ralationahip  vith  triba 
B«Bbar  Qlann  Calae,|  vhoaa  fatbar  vaa  on  tlta  Rinoon  oouneil. 

I 
Tha  aaeurlty  chlaf  at  tha  oazd  room,  Calao  was  hard  to  Bias.  A  shada  ovar  aix 
faat  tall,  ha  vaighad  oloaa  to  300  pounda  and  drova-a  naw  whita  Cadillac.  Calac, 
who  had  what  fadacAl  proaacutora  oallad  an  "axtanaiva  oriainal  racerd," 
including  a  falony  {burglary  conviction,  axartad  influanca  through  "Buaola"  and 
payoff I,  Banjaaln  aaid. 

Nhan  ha  quaationad  Patti'a  Intaraat  in  a  vantura  that  aaaaingly  loat  aonoy, 
Banjaaln  aaid,  ha  waa  told  that,  in  gaabling,  all  ia  not  what  it  aaaaa.  Ba  aaid 
ha  evarhaard  Patti  aay  that  in  tha  card  rooM,  for  inatanea,  Calao  alraady  vaa 
"awallowing"  proflta,  not  raporting  ravanuaa  to  tha  tribal  cotincil. 

^^.Ihifwaan't  lllca  Navada,  whara  tha  casing  Control  Board  auditad  your  booka 
4Lnd  paid  surpriaa  viaita  to  your  counting  rooa.  You  only  had  to  ahow  tha  Indiana 
'%   profit-and-loaa  column  at  tha  and  of  tha  nonth,   Patti  said.  \ 

A  lot  of  monay  liatad  aa  a  loaa  raally  vaan't.  Xt  "atieka  to  your  fingara," 
ha  aaid.         '  I 

Thara  ia  long  praoadant  for  danial  whan  it  ooaaa  to  organiiad  eriaa  in 
Aaariea.         i 


No  laaa  than  J.  I  Edgar  Hoovar  rafuaad  to  baliava  thara  waa  a  Mafia  until  1957, 
whan  Ita  laadara  vara  caught  aaating  in  Opatata  Kaw  Vork.  Zn  Laa  Vagaa,  navar 
Bind  that  Bugay  Siagal  opanad  ono  of  tha  first  caalnoa  and  invaatigations  found 
aob  linka  to  10  othara.  "Many  Navadans,"  raoallad  forsar  fadaral  proaacutor  C. 
Stanlay  Buntarton,  |kiaaad  it  off  aa  "a  fadaral  vandatta  againat  tbair  atata." 

Haminga  of  "O.C."  intaraat  in  Indian  ganaa  aiailarly  hava  baan  nat  by 
akapticiaa. 

**In  15  yaara  of {gaaing  activity  on  Indian  raaarvatiena  thara  haa  navar  baan 
ona  claarly  provanicaaa  of  organiiad  criainal  activity,"  Ban.  John  McCain 
(R-Arizona)  aaid  upon  tha  1988  introduction  of  lagialation  to  craata  a  National 
Indian  caaing  Coaaiaaion. 


Tha  thraat  vaa  diaaiaaad  with  cbaie  flair  laat  yaar  at  a  Laa  Vagaa  aaating  of 
tribal  laadara  and  I  Tony  Hopa  ~  a  lawyar  and  tha  aon  of  antartainar  Bob  aopa  — 
who  vaa  naaad  by  Praaidant  Buah  to  haad  tha  coaaiaaion. 

Whan  an  Apacha  official  coivlainad  that  Arizona 'a  attomay  ganaral  aav  tha 
Mafia  bahind  avary i cactua ,  Hopa  of farad  a  atory  to  raaaaura  tha  Indiana  that  ha 
undaratood  tha  ludicreusnaaa  of  auch  a  notion: 
I 

"Z  hava  thia  iaaga  in  ay  own  Bind  whan  thay  talk  about  Mafia  infiltration.  On 
tha  outikirta  of  Laa  Vagaa,  at  aix  in  tha  aoming.  A  black  Lincoln,  six  paopla 
eoaa  out  of  a  houaa  in  black  auita,  black  bata  with  a  bunch  of  guna,  opan  tha 
trunk  of  tha  Linoeln  and  apaad  out  aeroaa  tha  daaart  300  allaa  to  put  tha  auacla 
on"  —  nov  tha  punch  lina  —  "30,000  haavily  araad  Indiana." 


208 


PAS!    27 
I   1991  Los  An9tl«l  TlBM,  OCtobir  7,  1991 

Th*  erovd  burst  'into  laugbtsr. 

Chris  Pstti'a  car  was  a  Lincoln.  On  March  31,  1987,  his  drivar  sssmI  it  up 
to  tbs  aast  tarainal  at  San  Diago'a  Lindbargh  riald  to  aaat  two  aan  from 
Cbioaao:  Nicbaal  C^   Caraeci,  93,  and  Donald  (Tba  Nisard  eC  Odda)  Angellni,  65, 
dascribad  by  tha  ni  as  ovarsaar  of  tho  Chicago  sob's  gaabling  intarasts. 

On  tha  vay  to  Rinoon,  thay  sat  Calae  at  a  bakary  in  Bsoondido.  An  aqant 
ovarhaard  anippata  io«  talki  "Chips,  avarything  all  raady."  "Mot  an  unraasonatola 
contract."       { 

Tha  Ban  rattimad  tha  naxt  Bonth.  Ovar  dinnar,  Banjamin  raportad,  tha 
vhlta-halrad  Angalini  announoad  that  tha  eparation  was  going  to  ba  run  "our 
way." 

Travallna  undarltha  nana  "Brooks."  Angalini  was  a  datail  Ban.  Ha  notsd  that 
tha  bingo  hall  wa8i41  ailaa  froB  Hotal  Cirela,  that  it  naadad  stucco  and  hid 
cracks  in  tha  parking  lot.  Ha  waighad  tha  pros  and  cons  Ilka  a  classic  aiddla 
nanagar,  which  ha  w««,  »•  •  "ob  "capo,"  just  balow  tha  vary  top  laadarship. 

Caraooi,  Angaliai's  brethar-in-law,  was  a  stap  lovar  on  tha  totaa  pola, 
assignad  to  "raaasart  tha  influanca  of  tha  Chicago  syndicata  on  tha  Wast  Coast," 
fadaral  authoritias  said. 

Thraa  Bonths  laiar,  Angalini  flaw  back  to  California.  Aganta  raportad  a 
aaating  in  Los  Angelas  with  tha  businassBan  Patti  proposed  aa  a  "front,"  Saa 
Kaplan,  a  faatbar  suppliar  who  sinoa  haa  diad. 

Kaplan  has  baam  around  "paopia,"  Patti  aaid,  but  had  a  clean  record,  having 
even  passed  screening  by  the  state  attorney  general 'a  office  when  his  naaa  was 
subaitted  with  a  card  rooB  proposal  for  laparial  Beaeh. 

Mow  his  naaa  woald  go  atop  tha  prospectus  aubaitted  to  Rinoon. 

Ten  other  group*  wanted  to  run  the  gaabling  there  after  departure  of  the  last 
aanagar,  Includingia  pair  of  foraar  police  officers.  But  whan  Petti  returned 
frea  the  Los  Angeles  aeeting  July  13.  his  phons  rang  with  an  optimistic  aessaga. 

"Everything  is  going  forward,"  Calae  told  his. 

U.S.  Dietrict  Judge  Gordon  Thoiqpsen  Jr.  had  approved  the  "roving"  wiretap 
three  days  sarlieri  All  told,  agents  would  intercept  6,033  ealla. 

They  recordad  Petti  and  Calae  diacueaing  several  reservation  deals  around 
California.  Ona  gambling  promoter  waa  inprassed  with  Petti,   Calae  said,  and 
"won't  Bake  a  aovei  without  first  going  through  you."  Another  tiae,  Calae 
laaanted  that  a  veteran  bingo  nanager  —  who  hae  worked  throughout  the  state  — 
preferred  "to  go  through"  two  reputed  Pala  Springa-area  organixed  criae  figures. 

The  Rincon  ploti  eolidified  in  the  fall  of  1987,  when  California  approved 
off-track  wagering]  on  horee  racea.  Undar  court  rulings,  reservations  could  offsr 
it  too.  By  Nov.  Ill,  in  a  call  to  Chicago,   Petti  envisioned  alaoet  a  full 
oasino,  with  horsei  betting  added  to  tha  carda  and  binge. 


209 

pa4i 


1991  Lea  Angtlu  TlMi,  Oototer  7,  1991 
CarBooli  "Omm,   that's  m  big  vlnnar,  don't  yeu  thiztk?" 
Pattl:  "You'll  handla  tvo  or  thr«*  hundred  thousand  a  (axplstlva)  dajj 
Caraoelt  "I  just  want  to  aaka  aura  va  gat  It,  if  anybody 'a  gonna  gat  it." 


.i.. 


Thair  propoaal  gtiarantaad  tha  Tw<<i»«f  $30,000  par  month,  plua  91%  of  any 
irofita  —  although^  "thay'll  navar  aaa"  that  part,  calae  notad  in  ■  oall  to 
Patti.  Tha  trlba  would  hava  to  agraa,  ha  aald,  baoauaa  "aenay  talka." 


But  Patti  and  Calac  undarastlaatad  tha  difficulty  of  gatting  anything 
through  Rinoon'a  fiproa  elan  politioa.  Chicago  aoon  vaa  aaklngi  Why  ara  thoaa 
"(axplatlva)  aorona**  talcing  so  long?  i 

Aa  Calao  oxplainlad  It,  bia  fallow  Indiana  alwaya  argua.  "go  around  in  : 
oirelaa."  Ha  aald  hk  finally  told  thaat  "Wa'ra  going  to  ait  down  and  you'ra 
aithar  gonna  (axplalblva)  do  it,  or  I'm  walking  away.  You  guys  aran't  gonna  have 
(axplatlva)  and  wa'ra  gonna  go  to  tha  Palm  Springs  Indians." 

Ha  waa  partioulalrly  fruatratad  Dao.  9,  whan  tha  Tribal  Council  bald  a  aaaring 
on  gaobling  propoaajls.  K   San  Diago  attorney  dalivorad  a  (1,000  faa  to  aoo^npany 
tha  application  baa^ing  Kaplan'-a  naaa. 

That  night,  Calaio  phonad  Patti  to  raport  thay  "alaoat  had  It."  But  alwoaan 
on  tha  council  kapti  aaklng  aJMUt  Glann  Calao 'a  tia  to  tha  pro j act.  Sha  alio 
rantod  on  about  Kapjlan  not  baing  tharo  in  paraon.  I 

"How  do  wa  know  |thia  man  raally  axiata?"  aha  aakad.  "Ha  could  ba  aoaa  nama 
you  took  off  a  toati|atona . "  I 

Patti  wanta  tei  knowi  Nho'a  aaking  all  tha  troubla? 

It  was  Glann's  cousin,  Ituth  Calae.  Sha  waa  vary  auapieioua.  | 

Ruth  vaa  not  aoaally  opposad  to  gambling,  but  waa  appallad  by  tha  proaotars 
who  approaohad  tha  jtriba.  On*  of farad  a  starao  aystam  aa  a  "gratuity."  Anathar 
proBisad  "undar  th^  tabla"  payaanta.  A  third  aakad  if  ha  could  aat  up  priWata 
rooms  for  "hoataaa«|a . " 

Sha  haard  atoriaa  from  othar  California  raaarvationa  aa  vail,  including  how 
tribal  laadars  at  two  of  tham  had  baan  murdarad  aftar  complaining  that  Indiana 
waran't  gatting  a  ^air  ahara  of  gambling  profits.  And  down  at  Barona,  a  binge 
aanagar  nanad  Stavart  Siagal  had  juat  baan  caught  rigging  gaaaa,  planting! 
"shilla"  in  tha  audianoa  to  play  praarrangad  winning  nuabara.  j 

So  whan  Clann  aurfaoad  in  Rinoon'a  oard  room  —  aha'd  known  him  for  yaara  — 
Ruth  bagan  "raiaing  hallelujah."  I 

But  ha  had  folldwara,  particularly  among  three  clana  of  Calaoa.       { 

"He'a  juat  Glarai  ...  he  wheela  and  daala,"  shrugged  another  cousin,  Doug 
Calao.  "Ha  talka  smart.  .  .  .  He'a  collected  from  insurance  coaqpanlaa  fen  people 
who  have  got  hurt  in  auto  aooidanta." 


210 

PAGE      29 

1991  Loi  Angtlei  TIms,  OctobM:  7,  1991 

Dou9  and  othars  llatmcd  vhwi  Glenn  told  Uira  "I  )uv«  p«opla"  vlth  rtlOUrces 
to  Baka  tba  gaablin«  vork.  With  Rutb  sohadulad  to  com  up  tor  raalaetlen,  aany 
Calaoa  jolnad  tha  oaaipaign  to  dafaat  har. 

Mtti  conlaaratad  witb  Glann.  othar  Indiana  ahould  appraolata  bia,  Pattl 
aaid.  Wasn't  ba  bringing  tba  baat  bid?  And  ba  navar  took  aonay  froa  tb«  triba  — 
ba  only  took  trom  tba  "otbar  aida." 

*  Dae.  17 1  In  Cbioago,  Caracal  la  naxvoua.  Ba  and  Angallnl  ara  going  to  aaa 
•Nlnga'  carllal,  tba  acting  criaa  boaa  tbara,  for  tba  "final  aay." 

Ha 'a  not  aura  bev  to  advlaa  Carllal  on  off -track  batting.  Mbat  if  tbay'ra 
raldad? 

Pattl  I   "If  thay  plnob  you,  you  put  a  raatrainlng  ordar  agalnat  'aa." 

Caracal  agraas.  Tbay  could  hlra  aoaa  hotahot  lavyor  to  ralaa  civil 
rlghta  clalsa  on  babalf  of  tha  Indiana.  Soaaono  lika  Alan  OarshowitB  frea 
Harvard.  Of  couraa,  "tbaaa  lawyara  faas,  tbay  kill  you." 

*  Dae.  20 1  In  tba  aoviaa,  aucb  aaatlngs  taka  placa  at  rotuid  tablaa  ovar  bovla 
of  paata.  In  raal  Ufa,  It  vaa  braakfaat  at  NoOonald'a. 

At  9130  a. a.,  aganta  froa  tba  cbioago  offica  of  tba  TBX  vatcbad  Angallnl  and 
Caracel  arrlvo  at  tba  fast  food  raataurant  on  Zdka  Straat  in  Addison,  111. 

aeon  after  oaaa  tba  chauffaurad  car  of  8«b  Carllal. 

Tbay  aat  for  an  bour,  tban  left. 

*  Dao.  221  8132  a.B.  Caracci  oalla  Patti  and  aaka  if  ba  naada  to  talk.  Xt'a 
tbalr  signal.  Pattl  aakaa  bis  way  to  tba  7-Blavan  and  calls  a  Cbioago  pay 
pbona,  at  a  oar  auotlen  businass.  Caracci  fills  bia  Ini 

Tba  boaa  hadn't  avan  looked  at  the  contract.  "Do  it,"  ha  aaid.  Just  lika 
that,  approved  a  9500,000  invaataent.  Nov  thay  have  to  find  ways  to  get  the  ekla 
back  to  Chicago,  "filter  the  aeney."  caracci  can't  aapbaalte  enough  the  need  for 
prasaution. 

"You  gotta  be  in  the  background,  oauae  you  know  they're  gonna  hook  you  right 
up  baok  through  here.  .  .  .  Tben  that 'a  gonna  be  the  (expletive)  end  of  it." 

pettii  "Z  don't  dlsouaa  nothing  with  nobody." 

*  Jan.  16,  I9«ti  Caraocl  aaya  Angelini  baa  selected  a  71orlda  aan  to  run  tha 

ball. 

"This  guy  is  supi>osed  to  be  a  helluva  (expletive)  promoter  .  .  .  and  he's 
with  the  (bleeplna)  Indians  already,  he's  got  bis  naae  down  there  ah,  the  Bureau 
(BIA),  in  Hlaconaln,  he'a  got  one  of  these  joints." 

They'll  have  to  conault  the  New  York  aeb,  however,  beeause  the  guy  la  "with 
New  York." 


211 

PACI   30 

1991  Lm  An9ele8  Tiies,  October  7,  1991 

•  Jw».  X9:  P«ttl  not««  that  any  oontraet  with  tha  trlba  will  hava  to  go 
throu9b  tha  BZA. 

Caraccl:  "That's  just  a  atamp,  ian't  it?" 

Savaral  yaara  age,  aaid  tba  rapid  growth  in  Indian  gaabling,  BZA  officials 
aakad  tha  fBI  to  oonduet  baoJcground  ohaoka  on  propoaad  finaneiara  and  Managara. 

"Ttiaia  aaaaa  ♦;»  lia  ■naa— nrTilarirT^onfrnnra)  don't  naaa  tha  raal  lovaatora."^ 
aald  Tea  oowall,  rorsor  auparintandant  o£  tha  BZA' a  Soutbom  California  office. 

Although  tha  chaoka  occasionally  found  a  falony  oonvlotlon  —  tha  on*  ground 
to  disqualify  an  Invaator  —  th«y  did  not  leava  Devall  with  meh  eonfidanca. 

■You'd  hava  to  hava  a  hall  of  a  baolcground  tc  gat  notiead,"  ha  aaid.  "Tha  guy 
who  atopa  you  on  tha  highway  dooa  a  battar  chacic. " 


"Thay  caaa  cloaa,"  tribal  eldar  Masaatti  said  latar  of  Pattl 
friands.  "Wa  wara  lucJcy." 

Xndaad,  nawa  froa  tha  "raa"  aaaaad  upbaat  for  tha  Chicago  crowd.  'Tha 
alactiona  eaaa  out  pratty  good,"  Calao  glaafully  told  Patti  ona  night. 

Pattit  "Tha  alactiona?" 

Calaoi  "Ruth  lost,  bar  big  fat  ass  is  out.  Bo  you  guys  ara  gonna  gat  it." 

Utar,  ha  confiraad  it:  "Svarything'a  a  go,"  tha  tribe  had  votad. 

Than  tha  folks  at  Rincen  started  aquabbling  again.  Bonaone  wondered  if  they 
could  get  a  better  deal  by  splitting  the  gaabllng  in  two.  Keybe  get  $35,000  a 
■enth  for  the  cards  alone,  extre  for  binge. 

Petti  blew  up  when  Calao  told  his.  He  waan't  going  baok  to  Chicago  and  make 
a  fool  of  hiasalf. 

•  March  St  AngeLini  la  having  aeoond  thoughts.  "Re's  heaming  and  hawing," 
Caracci  tells  Pstti. 

It' a  not  Barely  the  unpredictable  Indians.  He's  wary  of  the  Florida  bingo 
manager,  who's  an  agoaaniac  and  spread  thin  alrsady.  And  he  doesn't  like  the 
perfonanoe  of  another  "joint"  they  hava,  a  non-Indian  bingo  hall  outside 
Baltiaora. 

With  Rlncon,  he  has  the  middle  manager's  worry  —  that  he'll  look  bad  to  hia 
bosses.  "He  don't  went  to  go  to  these  people  and  get  that  kind  of  eoney," 
caracci  explains,  "end  then  come  up  abort." 

•  March  17:  The  Chicago  boya  are  backing  out.  Angelini  simply  isn't 
comfortable  investing  the  orgenitation's  cash  at  Klncon. 

"It'a  a  shame,"  Caracci  conaoles  Petti.  "...  You  got  the  <expletive)  door 
open." 


212 


PAGX   31 

1991  Los  Ang«les  Times,  October  7,  1991 

Of  coursa,  ir  Pstti  can  put  to9«th«r  a  deal  with  othar  inveatora,  Chloago 
will  taka  a  placa  of  tha  profits. 

Pattl  isn't  fasad.  It  ao  bappana,  ha  ]cnotra  a  guy  who  alght  ba  intaraatad. 

Banjaaln  had  baan  telling  bia  about  a  Naw  Jarsey  nan  who  laundarad  fundi  for 
Coloablan  drug  lord*. 

It  WBB  a  covar  ^tory  to  Introduca  an  undarcover  FBI  agant.  Pattl  had  nevar 
takan  tha  bait  bafqra.  Nov  ba  did. 

on  April  S,  ha  aat  "Pata  Canuaal"  —  actually  Aaant  Patar  Ahaam  —  and  they 
drove  to  Rincon  for  a  tour.  Glenn  Calao  said  ha  vould  need  913,000  to  "loeX  in" 
the  council,  the  agent  reported  later. 

This  time,  thay  would  put  Calao 'a  na»a  atop  the  proapectua.  If  anyone 
wondered  how  ha  got  money  to  open  a  gambling  hall,  he  could  aay  It  traa 
inherltanoe  from  a  "Couain  Red  Cloud." 

But  it  waa  a  doomad  plan.  Tha  tribe's  attorney  reminded  Calao  hia  name 
couldn't  be  usad  because  of  his  criminal  record.  The  FBI's  interest  was  soon 
detoured. 

I 

The  foous  shifted  the  moment  Petti  told  "Pete,"  the  undercover  agent,  that 
he  ]cnew  a  prominant  San  Diego  buainasssan  who  could  help  get  money  out  of  the 
country.  It  was  no  iless  than  Richard  T.  Silberman,  onetime  chief  of  staff  to 
Sev .  Edmund  S.  Brown  Jr. 

'   In  February,  1989,  the  Senate  Select  Committee  on  Indian  Affairs  held 

'hearings  on  tha  "Federal  Government 'a  Relationship  Kith  American  Indians."  / 

During  a  brief  portion  on  gambling,  three  witnaases  gave  varying  appraiaala  of  / 

tha  threat  of  organized  crime.  / 

FBI  Deputy  Assistant  Director  Anthony  E.  Daniels  said  there  waa  mob  ! 

involvement  at  the  etart  of  Indian  bingo  In  Florida,  but  didn't  see  it  as  a 
"major  problem"  at  the  moment.  Of  courae,  penetrating  "fronted  businesses"  was 
difficult,  and  "greater  infiltration"  was  likely  If  tribes  opened  full  oaalnoa. 

Callfcmia  Deputy  Atty.  Gen.  Robert  Morehouse  said  mob  figures  had  been 
spotted  on  at  least  two  reservations  in  hie  state i  In  1980,  Palm  Springs-based    I 
Rocco  Zangarl  opened  ■  card  room  at  tha  Cabazon  Rassrvatlon.  In  1985,  Jamee  L.     ! 
Williams  of  Florida  took  over  bingo  on  the  remote  Jackson  Rancherla  in  Amador     I 
County. 

Then  came  a  third,  mystery  witness.  He  said  the  officials  underestimsted 
organised  crime. 

Identified  only  as  "Harty,"  he  testified  behind  a  screen,  his  voice  n 

V  y^llstorted .  v\ 

"Marty"  said  be  ihad  run  an  Indian  bingo  hall  as  a  mob  front.  Hs  had  cheated  > 
tribe  out  of  $eoo,000  a  year,  he  eaid,  but  kept  peace  by  paying  the  chief  $1,000 
a  week  as  a  "consultant." 


213 


ig»l  Let  Xnqtlu  TIms,  Octobur  7,  1991 


PAOS   32 


Km   Claimed  knowXAdgs  of  13  Indian  halls  arotind  tha  country  Inflltratadl  by  aob 
faalliaa.  Tbay  alclaatd  aonay  "through  tha  purchaaa  of  auppllas,  which  trara 
nonaxiatant  and  ov^rpriead,"  by  padding  payrolls  and  through  fixad  gaaaa  K- 
vaighting  aoas  balls  In  tha  bingo  mixar,  for  instanoa,  vhila  llghtaning  othars 
with  baliuB.      I ^_^^  I 

But-his^laias  wars  brusbad  off  by  Indian  laadars.  R«~w»«~AnanonyBous| 
lou^buth,  a  guy  with  a  bag  ovar  his  haad  tarnishing  thaa  all  wl%lr-tt~te»«d 
^rush.  I 

indaad,  thara  wis  oaraly  bis  word  for  all  this  at  tha  tiaa.  Only  auoh  iater 
would  an  Bssooiata  of  Naw  YorX  aob  ohiaf  John  cotti  ba  arrastad  for  shippflng 
alet  aaohinas  to  tha  fit.  Ragis  Kobawx  Raaarvatien.  only  latar  would  tha  slneon 
~  wirataps  ba  filad  sway  in  a  San  Oiago  oourtuous*. 

So  fsv  baIiavad-f"Marty«-orJiis  axplanatlon  of  why  ha  was  talkingi  "I  gjot 
raligion." 


But  that  wasn't 


tha  whola  story.  After  ha'd  basn  caught  stealing,  ha  eaae 


down  with  cancsr.  $oan  aftar  his  tastiaony,  ha  diad. 


^   "Karty"  was  Stayart  Siagal,  foraar  aanagar  of  Barona  Indian  Bingo,  45  tainutas 
south  of  Rineen. 


TWO  Bonths  aftar  tha  Sanata  haaring,  Chris  Patti  ws  under  arrest.  So  was 
Riehard  silbaraan.  ]  It  was  a  splashy  aoney-laundaring  ease,  with  Petti 
eventually  santanoed  to  30  aenths  in  prison,  the  foraer  politician  to  46  laonths. 

The  indictaant  iade  no  aantion  of  Rinoon.  That  plot  bad  never  been  easriad  to 
conclusion,  after  all.  I 

A  aonth  aftar  their  arrests,  the  bingo  hall  reopened.  I 

The  Rineen  council  finally  awarded  the  contract  to  a  group  of  buainaaaaan 
froa  Los  Angelas  ahd  Phoenix.  Taking  no  chances  this  tiae,  the  tribe's  ehairaan 
insisted  on  a  seoujrity  deposit  of  sorts:  "9130,000  up  front,  held  by  ue.^ 

aove. 


It  was  a  good 


The  new  aanagers  quiclely  began  fighting  aaeng  thaaselvea 


Whan  they  couldn't!  open  tha  hall  the  fourth  day,  the  tribe  padloelced  the  doors 
—  and  kept  tha  $180,000.  Six  years  after  the  bingo  began,  it's  the  only  aenay 
Rineon  has  gottsn  froa  gaobling. 

The  red,  whits  ind  blue  Rlncon  Indian  Bingo  sign  still  stands  along  county 
Route  «,  the  space!  to  list  ths  daily  jackpot  vacant.  Orass  grows  through  !the 
parking  lot.  Cows  occaaionally  wander  onto  the  road. 


For  the  Indians^  it's  little  consolation  that  gaabling  halla  sit  vaeaht  on 
other  California  reservatiena.  They  are  aware,  aa  well,  of  how  a  few  hav4 
flourished.  Not  fab  away,  Sycuan  has  new  housing,  an  aabulanoe  eervice  aiid  acre. 

Alternative  devllopaent  proposals  are  not  attractive.  Three  San  Diego {area 
tribes  have  weighed  offers  to  put  duaps  on  their  land. 


So  Rineon  is  considering  new  gaabling  proposala.  "Can  you  believe  it?4  asked 
Ruth  Calao. 


214 


PACl   33 

j  1991  LOI  AngolM  TlBM,  octobtr  7,  1991         I 

But  you  can.  On  la  qulat  aftamoon,  waiting  for  a  rain  oloud  to  roll  ev«r  Mt. 
Paloaar,  it'a  hard  ito  iaagina  that  a  Mafia  family  2,000  ailaa  away  cvor  vaa 
intaraatad  in  this  maglaotad  turf.  Many  on  tha  "raa"  atill  don't  think  iti 
happanad,  including  Ruth'a  own  aotbar.  I 

■That'a  juat  a  lot  of  ruaora  and  balonay,*  aha  said.  I 

"I  hava  a  friand  who'a  organiaad  oris*,  aura,"  Glann  Calae  aaid  during! a 
briaf  anoountar  witfti  a  raportar,  bruahing  aaida  all  quoationa.  "Chria  Patti. 
Ha'a  a  good  friand. I  Ba'a  alao  vary  poor.  I'a  peer.  Tha  band's  poor."     j 

Calao  haa  not  baian  aaan  around  Rincon  such  lataly,  triba  officials  aayi 

Ha'a  up  at  tha  tiny  Twantynina  Palas  Rasarvation  in  San  Bamardino  County. 
Serving  aa  ita  buainaaa  aanagar.  in  fact. 

Currantly  pending  before  California  offleiala  is  a  request  froB  Tventynine 
Palas  for  a  tribal-state  "compact"  under  terms  of  the  new  Indian  Gaming 
Regulatory  Act.  It  would  allow  off -track  batting  on  tha  reservation  in  the 
dasart  vast  of  Palai  Springe.  I 

Chicago  Hob's  Role: I  The  Key  Players  I 

The  Chicago  organized  crime  family  acted  much  like  any  large  business  I 
organliation  aa  it  moved  to  infiltrate  gambling  on  the  Rincon  Raaervationd  A 
proposal  waa  packagiad  for  a  decision  by  tha  top  boss,  then  carried  out  by  middle 
nanagera.  Bare  warai  tha  four  key  players,  aooording  to  rsX  wiratapai 
*  CHRIS  PSnii  Bel  waa  the  crime  family'a  contaet  in  Southern  California. 
Looking  to  "grab  aova  money,"  he  proposed  taking  over  the  Indian  gambling 
operation  north  of  $an  Diego  uaing  a  "front  man." 

I  J 

"I  guarantee  you^  you'll  handle  two  or  three  hundred  thousand  a  (expletive) 
day,"  ha  told  Chicago  higher-ups.  It  would  be  easy  to  skim  profits,  ha  aaid, 
beoauae  the  Indians i  would  have  a  minimal  role:  "No  counting  of  tha  money,  |no 
nothing."  I 

•  MICHAEL  C.  CARXccI:  He  was  Petti' s  contact  in  Chicago,  and  was  assijgnad 
by  the  family'a  boasas  to  raaaaert  their  influence  on  tha  West  Coaat.     , 
Enthuaiaatio  about  the  Rinoon  venture,  he  told  Petti,   "I  juat  want  to  make 
aura  wa  gat  it,  if  anybody's  gonna  get  it.  I  wanna  get  it  firat."        I 

Later,  fruatratad  by  tha  Indians'  squabbling  and  changing  demands,  he  amid, 
"It'a  a  ahame  .  .  .JThey  got  an  opportunity  bare  to  finally  get  aome  aoney|  out 
of  the  (bingo  hall)  i  .  .  .  and  t^.ay  end  up  (expletive)  around."  Patti'a 
raaponsa:  "You  need  I  to  stay  on  these  (expletive)  Indiana  a  little  more."  I 
I  1 

*  SAM  CARLISI:  He  waa  acting  mob  boaa  in  Chicago,  and  ha  endorsed  thai 
Rincon  project.  A  burly,  docislve  man,  he  approved  a  $500,000  investment  without 
even  reviewing  the  aambling  contract  aubmittad  to  the  Indians.  '■ 

"Ha  didn't  even  )^t  an  aye  that  guy,  you  know,"  Caracoi  later  told  Petti. 
■Ha  aaid  '  (expletive)  it  let's  go,  do  it,  do  it.  .  .  .  Don't  even  tell  me  about 
it.  .  .  .  What  tha  (expletive)  do  I  know  about  a  contract?'  ■  i 


215 


I  PACK   34 

I   1991  Los  An««lM  TImb,  October  7,  1991 

Th«  $500,000  l«|"llk«  piddling  cant*  to  thM*  9uy««  you  know,"  Caraooi  notad. 
I 

*  DONALD  AN6ELZSX:  A  mob  li*ut*nant  and  tho  cria*  family' ■  gaoblinf  axpart  — 
and  also  Caraooi' •  I brothar-in-lav  ~  ho  vas  •mmigttad   to  ovaraoa  tho  vantttra.  Ha 
vowad  to  Pattii  Tha  operation  ia  going  to  ba  run  "our  way." 

La  tar,  howavar,  |ha  had  sacond  thouohts  about  risking  tha  top  boaaaa'  nonay 
and  pullad  out.  AaiCaracei  axplainad  it:  'All  thaa*  (axplotivo)  yaars  ha  haa 
always  usad  hia  owtt  BR  (bankroll)  and  whan  you  usa  your  own  BR,  if  you  blow  it, 
(it)  doaan't  aaan  Anything,  you  undaratand?  You  taka  tha  leaa.  But  ha  don't  want 
to  go  into  thaaa  guys  and  .  .  .  blow  (thair  nonay) ....  Ha' s  afraid,  ha 
doasn't  know  what  tha  (axplativa)  thay'ra  gonna  do." 

ORAPHZC:  Photo,  Sidin  advartisss  gambling  at  Rinoon  Rasarvation,  but  oparatien 
has  long  baan  out  of  businasa.  ;  I>heto,  Ruth  Calse,  laft,  rasistad  sob  takaover 
at  Rincon.  DON  BOOKER  /  Los  Angalas  Tinas  Assooistad  Prassr  Photo,  Tha  lata 
Stawart  Slagal  admitting  staaling  as  bingo  managar  for  Barona  Raaatvation. 
Aaaociatad  Prasar  fhoco.  Chairs  on  tablaa  of  closad  Rincon  bingo  hall  in  1986 
photo.  DON  BXRTLBTTZ  /  Los  Angelas  Timas;  Photo,  CSRZB  tettz  ;  Photo,  mzchaxl 
c.  CARACCZ  :  Photo  J  SAN  CARLZSZ  ;  Photo,  OOKALD  AM6ZLZNZ  I  Nap,  Rincon 
Rasarvation,  Los  Attgslas  Timsa 

TYPEi  sariasr  infobox 

I 
SUBJECT:   PETTI,   $KRZ8;  CARACCZ,  MICHAEL  C;   CARLISI,   SAM;  AN6ELINI,  DONALD 
(THE  WIZARD  OP  ODDS)  ;  RINCON  INDIAN  RESERVATION;  KAFIA;  AMERICAN  INDIANS  —  SAM 
DIEGO  CODNTY;  GAMBtlNC  —  SAM  DZEOO  COSNTY;  ORCAMIZEO  CRIXB  —  SAM  DIS60  COaMTY 


216 


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219 


NFW  JEBSCY  LAW  JOUKHAL  SEFTEMBE»  13.  1993 


Was  Mob  Behind  Tribe's  Casino? 


FHMd  flf  te  Tribe 

S«yi  Vm  tPomt:  •'We  k«  aU  at 
w«b  Bob  Pnnk  bwwne  be  )W  n 
on  ol  anKy.  He  left  on  sood  Km 
aad  be  ■  >  food  fneod.  We  cipna  i 


Win  kU  of  Bfit>  Pruk  s  Omiaft 
w«h  wUtsKB.  Acd  ttsi  Wiliiua  a 
cuMidciwt  by   takni  jieeMBoaofi  id 

Vas  D<nk  tatd.  "I'm  gtad  we  hwad 
ttM  fltt.  Tftkc  my  wwti  for  n.  He  tau 
ao  MwityuMtJB  at  aU  Nooe  Nothaos 
■1   all.    The    BlA    fBomu   of   tDdaao 


58. 


nsidai    aad    twt-*UDt    uoomI    atf- 
veniM«     ^na^cr     for     Tht     Dath 

rtrftan   uuofcnai  ttai  hu  offiaal  rote 
wtfi  me  mbc  coded  m  1991.  Bia  toe 


Fnak.  addmg. 


c  10  die  nbc.     lays 
"If  tt»cy  were  fong  lo 

1  New  ieney.  Id  bk£ 

dttcf    Van     Dunk    and    the    tnbe's 
DC.    lotobyM.    Albcn 
o.  ali  deacnbe  Fra 
satuf    ai    totncww    wamig    in    Uie 
waft  iboald  dK  cian  receive  mbal 


A    1979    Nortel    iwganar   anicte 

WO- 
Wil- 

Insa  wed  Forhea  b«  wididii*  bs 

Bin  vohoBVity  after  be  ' 


duod  bofo  tiipT**"    *^  WillttBa 
hetpnt  Accanno  «mh  die  purdaae 


wont)  wu  pc0cd  by  dv  FBI  u  mrk 

S3S  miUioa  dunsf  die  cmilv  i980i 

Accordiag  lo  Uw-«siiuiicjneoi  of- 
fiaab  m  dK  cax  evasion  case  tod 
eiiewtaere.  Wtlhaira  bas  a  bunw  of 
owaoit  and  nioBinf  busmesacs.  hovn 
bago  pahon  to  «np  chtba.  wiUi 
adKfi  fraDOBf  for  bnn.  Aad  in  •( 
kan  dne  caxs.  Fraak  appewi  lo  be 
fmn^  for  WiUiaim 

Id  die  fini  cue.  Fraak.  aocordai 
u  New  Mcuco  i 

■  1981  B  «i  I 


pro>ecuior\ 

Savi    Frank    aooui    HuleaA 
"Jtiiwnv  Williams  buili  n  and  1  o- 
II     The    buikliDf    wai    tcaicd 
charwy  w  1  was  msi  uk  tandWrd 

The  New  Mcaico  repon  sau 
the  Hialeah  business  wu  cuec 
vtotMioRS  of  Fkmda  s  ^aimnf 
IOCS.  Fnak  wys.  'That  i  mtc. 
jua  owned  dK  buUdm; 

/Utqied  Skinny  of  fii^io  Pr 

In  die  durd  eumptc  cned  b< 
thor««s.  Frank.,  a  1937  fradua 
ScMsi  Kail  Un'vcrsny.  wu  bi 
atcng    with    Williana 


Wiltanas.  Accordmg  to  a  1912  repon 
issued  by  The  Governor  a  Orfmad 
Crime  PieveiEMii  Comrmsmi  laled. 
"InAtoKBoa  of  Orfanoed  Cnms  bao 
Bago  n  New  Mctko.  Frank  tailed 
to  dadoae  both  hu  and  wmams 
hall 

Ffank.   wAJUfOmg  aj  u»e  rcpon.  uaed 

iiw  nne  ol  en  auptoyee  of  tes  trom 

Hok^  Hsil.  a  biago  putor  a  Flor- 

n  reilirv 

I     WUlMarv  Mu  «:>  baakroU  ds  pctemal 

I  Weill 


, JackMO.  Ca 

The  accusation  was  bnaft  ■» 
earty  1986.  a  lew  momhs  ahc 
Rampoufhs  chief.  Van  Omk 
latraducBf  Frank  lo  the  New  t 
pteas  at  die  mbe  >  new  msiiaft 
coonlaat-  Frank's  New  Jcrsrv 
paay.  Rory  Manayemem  Corp 
upMd  a  coairact  with  die  cl 
I9S5  (o  betp  m  the  eflon  to  t 


Odioi.  paracttlarly  law  enfone- 
mem  oAienb.  charaocnze  Fnak  as  • 
fnn  for  Williams  and  WUlwm' 
Idafia  iiiiiiiiaiii  And  Wilbams.  uy 
federal  proaeaaors.  has  been  mvotved 
in  bngv  VBot  he  ran  an  AlcroQ  bago 
hall  B  1973  for  Joacpb  Merto.  de- 
icrdied  by  audionaea  as  an  Ohio 
btmo  kmi  coDVKUd  m  1979  of 
ducoBg  an  tUefai  brago 
grand  dieft  and  garablBg. 

Frank  s  mvotvcmem  with  Wiltiaras 
goes  back  to  1978  when,  accotdrng  to 
coun  papers  Filed  by  the  federal 
Mami  Smkc   Force   tn    I9S7.   Frank 

Wiiltams  and  others  lo  bribe  a  Flondi 

tegMlaooB  favorable  lo  diem. 


hjfh-satas  bmgo  hall  (or  49  p 

the    fUmap 

■9  get  SI  perccn.  The  co 

the  mbe  S29  millior 

15  yean,  accovdag  w  Fraak  aik 

Dunk. 

Abom  anrcn  momhs  after  du 

by  Frank.  William^ 

acomdag  lo  lederal  prpaecmort. 

Jackson  - 

SO  mki  Borthcas  of  Sacrainer 

as    chxf   financial    backc 

SI5.000  a  Bighi.   After  ye 


of  &SM.O0( 

and  anoraeys'  fees  to 

1991     Though  about  ha 


of  action  included 


n  die  I9T0I  lo  »vo«l 
;  die  New  ieney  Sale 
I  LovcMigaiiaa.  Fraak 
'  AMtaoay.  Yean  ago  1 


am    fvlilad    for 


concocted,   wnh  man  of  dK  profn 
goi^.    lUegally.    to   Willwns    cora- 
pattBS  rather  than  the  charmcs 
WUlMBS.   for 

Nathvdie 


Frank  acknowledges  pUnag  t  rote 
m  tryag  lo  set  up  the  bmgo  operation 
for  Williams  m  Albuquerque  b  1981- 
S2.  aad  fur 


oamad    prmc^als    m    the    propoaed 

venaae     worked    ai     Hialeah     Hali. 

After  bca«    i    which  he  ownsd.  But  he  wys.  "1  was 

of    .    on  my  way  lo  California  and  Janmy 

Hp  by   WUUmbs.  dK    .    askad  me  so  nop  by  and  check  a  out 

He  vataMd  by  opouon.   and  tor  paid 


ciiBrsabte    sobc-    i        Hale^  Hall 

a    1  i  ■    The    I    eunpte  of  FraiA  allegedly  frommg 

I  Fnak  Qefillo.    |    for  Williaim.  While  Frank  admas  he 
.  and  while  Flonda 


wah  tte  mob  bom  m  190  for  fisaig  i 
B  Fteida.  GehUo  was  coa-  I 
m  I9tl. 


I  oAioer  of  the  buu 
dK  WBlMrni 
1997  dM  "dttfe    I 
dw   rWillBna)    \ 
iHaU.' 


•ay.  though,  that  the  Wtlliams/ 

gnNp.  after  securing  an  empio 

h    the    Mi-Wuk    Ir 

told    90    perccm    of    the    comr 

group  tor  S7SO.O0O 


of  the  New 
corporation.     Rory     Manage 
Fraak    was    die    prcudOM   of 
Services.    Inc.. 

nself  as  a  business  cipert  m  n 
bingo  halls  on  reservatioas- 
Fraak.   however,   says  he  le 

Nov  29.  1985.  "before  die  « 
lions  suned"  He  says  he  w 
comftmable  with  die  team  b 
in  by  Willinms.  ipeciricallv 
direc  peoptc  he  says  be  laser  l 
end  were  convgBd  fdcas  Iran 
England 

He  produced  a  lener  fro- 
Flonda  aoomey  represemmg  W 
wlucit  ackiKVwledgcs  that  Frai 
ugMd  on  Nov  29.  I9K5.  ana 
fore  tfuukl  not  have  been  mdu 
an  laaial  plauaiff  or  a  subs 
cross-dcfcadaai .  Inuially . 
WUlBms  and  Arraw  Maau 
sued  Awbry  for  uaerfcnag  wa. 
coaoaa.  aad  Awbry  camei 
The   lawyer.   Brace  RaadaU  o 


220 


IMS  kno.  "Wc  m  uplom*  *« 
pouMnes  «  eanan«l  y"  t™" 

OiulmBii"  

<p9«RS>r  BO  iudi  ■eooo  "»  <*■ 
nimd.  u  Fmk  renaMOl  •  ™*- 
dcf^Aul  od  ts  oaaul  on  OK  ^lot- 
mK.  Frank  uliiuo  »  «"  «^^T, 
,9r7.  BrX  Oc  re^  <*•  "^ 
CO,  it>ou(B  RudiU  ra  on  BO 
1„^.  RioMI  Imi  HOC  ami.  "U^ 
nl  you  ]UB  Did  me.  1  """"SV  3id 
extncBol  trom  0>"  """^  ""ILZT  ' 
.   Law  laumai   reponn  i«  •'*" 

l|0. 

Fraok  pioduod  •  "'"'■"•  Sf"^ 

.«,h.tooo^t'».fr^y-,J 

lua  BtiMfii  out  becme  l  oMia  i  »■* 
the  bKkfrcKHih  of  thoM  pn^  ^U- 
luiM  tPTOUfW  B.  ud  I  ne«r  e*«  |« 

Eifhiaai    diyi    after 
nanon  '   from  Aiiu"* 
C^Uforma.  Fnak 

SSw  «  p™—  ot  R«r   M- 


•n«  fcdcnl  proKaon  m  Ftondi 
uier  cooclodo)  Ou.  Ok  mo  of  New 
EoitlMd  felooj  •cmiUy  broupB  Pra««    ! 
^J^lunu  iou>  0.  M>-WBk  ladao    i 

TVpraMcnon  mOwrlWTpre- 
,cmmi  mion.  lo>k  Frank  »  w,^ 

Frank  puvo)  •  omU  roie  m  •»  u- 
K„^  9,  WUluUM  "mJ  ha  imoquo 
lo  bnfce  m  unaainK)  ^^**"^V^*** 
jouujr  10  imi  lejalKW  favorable  lo 
Willmns  ind  hi»  ummin- 

xca>nlm(  lo  OK  mtrntnirtmi. 
Frank  pickoO  w  ""^  *'"°„^2' 
meal  from  •  lo«7r>»  '»'  WiUBini 


^g>» 


i,,l  de»eio(>ci  AwBiy  loai». 
•Frank  wu  mere  m  OK  "kP"^; 
ukj  he  «mi  OK  pranoea.  bu  •Ml 
ever  aw  wis  WUlaim.  who  ran  ok 
place.  1  oe«f  aw  Fra»k  bui  OKe  ot 

In    |9»5    Fraak   lold   lepooen   n 

,  leney  Oai  ba  boeter  wa  prt- 

punj  lo  o.«  .p  lo  $4  rmUKD  ^ 

htjaK  of  OK  »nmprait»   enon.  fct 

he  itfueol  «>  «»«rfy  "^  t"*" 

19S5,    be    OeKnbol 

New  Jeney  ««».  •»  niinnrtmi  i 
,a>  of  die  LUinmiiO)'."  eceoedat 
TV  A*rw  rort  7i«ei.  On  Se»».  3.  >k 


Fr»Bk  Rimtpough  iiioree^ 
Sdaeaei.  lod  Cluef  Vm  Dunk  «l 
uv  Frank's  fineJ  cobobh  eipuH 
ihoa  iwo  yon  efo  Howe»a.  ex 
,.«nui>     fonsed     ui     I9»5.     Ror 


>  recorts  w«r 
oie'Seaearr  of  SMe  m  T>eaoo_^T)i. 
OTporauoo  •  rer«a=>  «»«"■  *^ 
MiTO  of  New  Bnaiwick  i  M«»o  en 
McdiKbeoo.  "n  of  Rofy  » 
Frank  ■  effaro  on  bdmlf  of  Ok  li*t 

■They  i« . 

u  far  u  1  know 

Meyo  am  Roey  i         

TlBodOfe   Cobn   of   Livinfaoo- 


a  nic . 

C^a.  a  weil 
u  Eduon 
_  Joel  Milto.  will  MX  < 
She  lefemd  ill  il«no  ">  *;,?*'  ' 
lo  *i  lawya.  Sdonder  MuKi  o 
dmed  a  lamn  averal  pboee  enU». 
Ai  foe  Fraok  adiy.  he  By». 
wa  wortat  for  >  molical  lib  fan 
didnl  wort  OB  md  now  Im  r 
but  I'll 
i|  (el  Ok  tetcni 


(far  wmana 

on  of  I   St.OOO  fee 

bea«e  OK  propoeed  kfnfaooB 

I I   OK    oae    Senae.    While  Ok 

poravyed    Ok    iiiBaiiird 
I  pnnia^ajx  B  da  bribe 

Frenk  "        '"^ 

oely  a  Oai  of 

labbyn    end    i    waimii  

umed     ChkrteJ     Bofus.     wtio    h«l 
owned  Ok  SouBi  Ftondi  bmto 
Om  were  l»er  nken  o«et  by  WiUami 
,al    ikmaKd    by    Aciemiro    a    "> 
lUejed  acrapamer  of  Boi». 

ICO  aioanues.  h«>  pleaded  gmlly  a  > 
biato  relaed  bnbery  chirje  o  «K 
19701 


Learntheanswerim 
— '  !  youenterthecouktroom, 


Limits  of  Speech 


In  Sale  v  iimpU.  J43  N  J  Su- 
per 98  (1993).  en  tvaii  axm  nijed 
ihit  1  tener  coottnung  a  cooieswoo 


pnea    The   Sopmne  Coun   wUI  re- 
vKw  bodi  holdings. 


his 


nfe 


adnuaible  ((aas  Ok  deluidaa  ine 
lener  wa  oinKd  o»er  lo  proeeraor  i 
by  Ok  wife  1  fiOier.  wt»  foua)  a 
amit  ho  daiifaefs^Po^f",^ 
ne  helped  her  move  The  wife  da  no 
Um  her  faOKt  Dad  found  Ok  leBer 
The  (mel  ruled  0«M  Ok  oiaimal 
ammmcam  prmleje  m  Ok  rula 
of  ev«teM  does  m  apply  >o  •  wrn- 
m  Biiemea  oiai  falls  lao  ok  hands 
of  a  Oitfd  pany 


And  a  •  case  Oial  could  provide  I 

peranal  «|ury  lawyers  wMh  a  whole  I 

jKw  lei  ol  pUauAs.  Ok  Coun  will  I 
rcvaw  an  appeals  coun  l  ruling  OKI  r 


The* 


sof  I 


oeah  of  her  fiance  has  a  doa  eaaifh  i 
rdauoaafav  a  Ok  vkubi  a  sue  for  1 
emoooal  disnea.  Prevausly.  couns 
have  allowal  sue*  suai  when  Ok 
plaiaiff  ha  a  •■inarwal  or  nainae. 
fanulal  lelauonah^'  wnh  Ok  vKiim 
TlK  opaan  a  Oa»*»  v  Crrjor. 
261  NJ  Super.  110  (19921.  wnoen 
by  Afpeilaa  DivtsMa  ludce  Howard 

,  'fanaty'  IS  not  a  be  ikiuiiiacd  by 
applieaica  of  •  vertal  (omala  fan 
rather  by  paiticulaneed  snfiMawi  a 
I  Ok  aalaes  of  Ok  aciual  lelauooshsx 
,  ai  t™*  a  OK  csxxezi  of  Ok  gals 
,    aoi^H    a    be    served    by    Ok    legal 

"or.»or.    No.    36ja. 
coua  be  Ok  laea  na  o(  ibe  OanJ 


The  FUCTEVER  COMPLATON  OF  lUIXH  PREiBENCES 
ANDPROCEDUPiSINTHESTATCSTmCOUKR- 
AVmSOURCEOF  INFORMATION  FOR  EVERY  ATTORNEY 

AvUUBliNOWFORONUm  DiSCOUVRTONCTmOINm 
B00tCAliNEWJE»SEYUWJ0l)INALI00B*rai)MJ«5- 


221 


1U.S.NEWS 


Gambling  with  the  mob? 

Wise  guys  have  set  their  sights  on  the  booming  Indian  casino  business 


Seatea  in  the  largest  Sen- 
ate heanne  room  v/ith  a 
hood  over  his  nead  to 
protect  his  identity,  tne  witness 
identified  oniv  as  "Marty  '  had 
some  coniessions  to  maxe.  Not 
oniv  had  he  helped  the  moo  set 
uD  ana  run  a  hieh-staKes  bingo 
nail  on  an  Indian  reservation. 
he  testilled.  but  be  haa  oadded 
;;xDenses  ana  robbea  tne  inbe 
01  over  i600,000  a  year. 

But  even  Martv  s  sensational 
:3les  01  flllinE  bingo  calls  wiin 
;eiium  and  awarainc  16O.OOO 
:ars  to  oaid  shills  paiea  m  com- 
ranson  10  nis  next  news  ilasn. 
Marty  told  members  or  the 
Senate  Select  Committee  on 
Indian  Affairs  mat  12  otner  in- 
Jian  bingo  nails  also  were  con- 
trolled by  the  mot).  "Organized 
cnme  is  destroving  tne  Indian 
reservation,  he  said  in  a  slow. 
.Tiechanical  banione.  nis  voice 
jeliberatelv  aiiereo  througn 
the  use  ot  a  special  macnine. 

Four  vears  later,  tne  leaaers 
ot  the  Indian  gamoling  inaus- 
•,r\  are  still  smaning.  Martv  s 
jDOcaivpiic  visions  01  Mafia 
aominaiion  nave  oeen  proven 
wrong,  thev  argue,  aading  tnat 
InOian-owned  casinos  ana  bineo  halls  1 
jre  more  heavijv  reguiatea  than  tne  I 
Liutz  palaces  in  Atlantic  Cir\  and  Las  1 
Veeas.  But  wnile  it  s  true  that  the  in- 
dustry has  grown  mucn  more  sopnisti-  I 
cated  and  has  weeded  out  tne  most  ve-  1 
nal  operators,  many  questionable  1 
cnaracters  remain.  From  dozens  of  in-  t 
lerviews  with  federal,  state  and  local  I 
law-eniorcement  oilicials  and  from  doc-  1 
uments  obtained  througn  the  Freeaom  1 
01  Intormaiion  Act.  L'.S.  Sews  nas  1 
leamea  of  a  number  of  cases  mat  raise  1 
senous  doubts  about  the  integnry  ana  1 
inviolabilitv  of  Indian  casinos. 

The  new  oirtfalo.  Devastated  bv  unem-  < 
ployment.  substandard  nousing  and  I 
scnools  and  cnppung  aiconoUsm.  manv  1 
Indians  nave  come  to  see  eamoiina  as  \ 
•:he  new  buffalo" -the  first  true  eco-  1 
nomic  opportunitv  in  two  centuries.  But  1 
buflalo  never  paid  dividends  like  a  one- 
armed  bandit,  in  Connecticut,  the  I 
sprawiicg  Foxwooos  Casmo  owned  bv  1 


Bie-tinic  entennise.  The  huge,  new  mancet  in  Indian-owned  casinos  is  a  araw  tor  venaon. 


the  MashantucKet  Pequots  could  con- 
ceivablv  gross  il  billion  tnis  vear  and 
net  half  that  amount.  On  the  Shakopee 
Mdewaxanton  Dakota  reservation  near 
Minneapolis,  the  Mvstic  Lake  casino 
takes  in  so  mucn  casn  that  tnbal  mem- 
bers sometimes  receive  dividend  checks 
for  up  to  S20.000  a  person  per  month. 
one  official  with  the  Bureau  of  Indian 
Affairs  says.  And  lust  last  month  near 
Syracuse.  N.Y..  the  Oneida  Indians 
opened  the  SIO  million  Turning  Stone 
Casino,  exoected  to  rake  m  well  over 
SlOO  million  a  vear. 

Now  that  73  tnbes  in  19  states  offer  or 
will  soon  offer  full-scale  casino  gam- 
bling, tne  big  ooys  nave  laxen  notice. 
Atlantic  Citv  casino  owner  Donald 
Trump  recentiv  sueo  the  U.S.  govern- 
ment lor  allegedly  giving  an  untair  ad- 
■.  antage  to  tnbes  settine  up  casinos.  And 
he  s  out  to  prove  tne  Ifedgling  industry  is 
comiDt.  ".\  lot  01  the  reservations  are 
being,  at  least  to  a  cenain  extent,  run  bv 


I  oreanized  cnme.  says  Trump.  "There  s 
I  no  protection.  It  s  become  a  lOKe. " 
Mobsters  did.  in  tact,  prey  uoon  Inai- 
an  eamoiine  dunng  the  lysOs.  Besiaes 
Martv.  wnose  real  name  was  Stewart 
Siegel  and  who  managed  a  California 
bingo  nail  for  the  Barona  Indians  be- 
fore he  died  ot  cancer.  Indian  gam- 
blings oist  01  characters  was  like  some- 
thing out  of  an  Edward  G.  Robinson 
movie.  Just  this  spring.  lor  example,  re- 
puted Chicago  mob  boss  John  "No 
.Nose  DiFronzo  and  his  gambling  ex- 
pen.  Donald  "The  Wizard  of  Odds" 
Angeiini.  were  convicted  of  conspiracy 
ana  fraud  in  a  failed  attempt  to  take 
over  gamoling  operations  at  the  Rincon 
Reservation  near  San  Diego  in  the  late 
'?0s.  The  Chicagoans  nad  hopea  to 
skim  protits  ana  launaer  moo  monev. 
FBI  wiretaps  snow  in  1980.  California  s 
Cabazon  incian  irioe  nired  as  ineir 
poKer-room  manager  one  Rocco  Zan- 
gari.  identified  as  a  mooster  in  Senate 


3) 


.  S..NEWS  St  WORLD  REPORT.  AUGUST  21 1993 


84-760  0-94-8 


222 


tesiimonv.  He  was  subsequentiv  tired,  i  The  Pennsvivania  Cnme  Commission 
Later,  after  inoal  Vice  Chairman  AJ-  i  savs  that  Henrv'  "Zebo  '  Zottola.  ;". 
trea  .-Mvarez  comolainea  to  local  news-  i  was  presioent  oi  Rocca  s  Italian  Fooas 
Dapers  aoout  ooiter-room  sKimmine.  i  ano  that  Louis  Raucci  St..  65.  was  an 
.\Jvarez  ana  two  otners  were  snot  aeaa;  i  investor  and  employee.  Zottola  hems 
;ne  case  nas  never  been  solvea.  collect  payments  lor  the  Michael  Geno- 

There  s  orooablv  been   a   ieamme  |  vese  crime   tamilv   from   local   loan 


curve,  ana  oeODie  have  been  oumed." 
^avs  Rick  Hill  ot  the  National  Indian 
Gaming  Association.   But   Las   Vegas 


sharks,  bookies  and  arug  aealers.  tne 
coranussion  says.  Raucci  was  convicted 
m  1990  on  racketeenne.  narcotics  and 


In  an  interview.  Medure  initially  de- 
nied knowine  Raucci  or  Zottola.  Later. 


was  an  open  town  tor  mobsters  m  the  I  tax  violations  ana  is  serving  a  27-ycar 
1930s,  he  adds,  policed  only  bv  a  sheriff.  |  jaii  sentence 
"You  aiwavs  have  to  look  at  things  rrom  i 
a  tusioncai  persoective." 

TrumD  s  hyperbole  not- 
withstanaing,  me  vast  ma- 
iontv  01  the  175  total  Indian 
casinos  ana  bingo  balls  are 
honest  and  clean.  Many  em- 
ploy Las  Veeas  or  Atlantic 
Citv  pros  and  have  vieiianl 
n-nouse  security  teams. 
Several  management  com- 
panies are  pubucly  traded 
jnd  have  passea  overlapping 
layers  oi  government  scruti- 
ny. The  FBI  do.  not  see  a 
cooramated.  cc.;cened  ei- 
!ort"  bv  orEanized-crime 
lamthes  to  raid  the  Indian 
2ambling  mausin'.  says  Jim 
Moodv.  cnief  ol  the  FBI's 
oreanized-crime  section. 
There  are  no  'publicly 
known  '  cases  oi  current 
mob  inllltration 

3ut  ihe  threat  remams. 
T.ie  bureau  nas  six  ongoing 
i.Tvestieations  — one  more 
;han  wnen  Mooay  testified 
^n  Caoitoi  Hill  lUst  a  tew 
Tiontns  aeo.  And  when  asked 
.vnich  cnme  lamuies  are  in- 
terested m  Indian  gamblmg.  Moody  re- 
plied: "I  don  t  know  any  that  arm  I." 

The  PmstnirOi  road  paver.  The  FBI  is 
.nvestieating  a  Pennsylvania  asphalt- 
companv  owner  wno  manages  a  maior 
casino  in  Minnesota  and  is  expanding 
nto  tribal  gambling  in  California.  Okla- 
.loma  ana  Ontano.  Canada.  L.S  /^ews 
nas  leamea.  .-Kngeio  Medure.  o4  oresi- 
jent  01  Gaming  World  Iniemaiional. 
has  no  cnminal  record  and 
nas  oassea  the  background 
cnecKS  reauirea  lo  manage 
tne  Shooting  Star  Casmo  in 
.Mahnomen.   Mmn..   owned 
pv  tne  White  Eanh  Band  oi 
Chippewa.  No  charges  have 
^een  tiled  agamsi  him.  But 
•ne  FBI  became  susoiaous 
vhen   11   learnea   Medure 
eases   a   .New   Castle.   Pa., 
^arenouse  to  a  oasta  lirm 
;nat  was  run  m  tne  1980s  bv 
-:Dutea  moosters. 


called  Medure  s  condominium  in  Pom- 
pano  Beach.  Fla..  and  Medure  s  con- 
struction comoanv.  Medure  savs  ne  nas 
no  organizea-crime  linKS  ana  claims 
Zottola  simpiv  called  to  aiscuss  ware- 
house remodeling  plans. 

Zottola  acKnowiedged  last  weeK  that 
he  called  Medure  repeatedly  in  198b  to 
discuss  the  warenouse.  He  admits  oeing 
fnenas  with  men  wno  the  cnme  com- 
mission says  are  Pittsburgh  moosters 
but  clauns  he  has  no  link  to  the  Mafia 
and  IS  just  an  honest  carpet  salesman. 

Althouen  Zottola  never  aamitted  it  to 


In  the 


MohawK  Bineo  Falace  in  Hogansour^.  A.  >'..  can  seal  up  w  1. 700  plaven  ai  once. 

he  said  he  had  met  Zottola  at  the  pasta  I  local  FBI  agents  when  they  questioned 
plant  several  times  but  claims  ne  was  I  him  three  months  ago  about  Medure. 
unaware  oi  Zottola  s  backeround.  Con-  I  the  calls  did  not  stop  in  1986.  Zottola 
iidential  teleohone  recoros  obtained  by  |  called  Medure  about  eight  months  ago 
U.S.  i\ews  confirm  their  reiaiionsnip.  A  I  to  discuss  selling  nim  video-poker  ma- 
24-Dage  summarv  oi  calls  made  in  1986  I  chines  to  be  usea  at  the  Minnesota  casi- 
trom  Zottola  s  Pittsburgh  home  reveals  i  no.  Medure  confirmed  the  call  but  savs 
that  Zottola  called  Medure  s  house  and  I  he  told  Zottola  he  was  not  interested. 
his  trailer  home  in  New  Castle  slx  times  i  "IMedurel  told  me  that  anvtning  he  put 
on  March  21.  1986.  On  Mav  v.  Zottola  i  on  that  reservation  had  to  be  approved 

by  the  state  of  Minnesota. 
And  1  lust  forgot  about  it  al- 
ter that.'  Zottola  adds. 

The  White  Eanh  tnbe  has 
had  some  cunous  business 
dealings  in  the  past.  In  1987. 
before  Medure  became  in- 
solved.  Carmen  Ricci  sold 
30  video-poKer  machines  to 
the  trine.  New  Jersey  otfi- 
cials  descnbe  Ricci  as  an  as- 
sociate of  the  NIcodemo 
Scanocnme  family.  .At  that 
time  iney  were  ieettimate 


3^ .  T--.V.. 

'JWitfiiir^^w^iiidiMipiiibHiiK  .  i.to^ 

..."WBBJpi^'il^g'^opP'"''''"  ^^  boomed:  _^  .  .   '' 

f^irtlWiBi ■nil ■  li r m~  gamblers  bet  between  S7.5  billkxi  end'' 
yjriUBMyiltfrlndian-owneO  casinos,  omgo  nails  ana  cam  moms.  ' 

^tlibes  Si  19  states  offer  or  are  about  to  begin  . '  ~l[ 
;Aill^scale  casino  eamt>iing.  ," 

.'sMashantucHet  Pequot  tnbe  will  enoand  . 

•tootcasino  nexttmntn  -  225  same  tables. . 

.jj^j^adkbexsmi  ana  a  bingo  nan  ror  L900  olayers. . 


i. SMEWS  i  WORLD  RETOBT.  AUC15T  Z3. 19S3 


223 


■  I.S.NEWS 

businessmen.    mbaJ  Chairman  DarreiJ 
"Chip"  Wadena  savs. 

Medure  profits  handsomelv  from  his 
casino  deal.  His  tirm  eeis  35  percent  of 
:asino  proiits  -  ai  least  S3  million  a  vear. 
Chairman  Wadena  lought  to  increase 
Medure  s  taxe  bv  5  percent,  at  his  own 
moe  s  exDense.  out  a  lederaJ  mediator 
rerused.  .Medure  nas  plans  to  manage 
casinos  lor  ine  Hopland  Band  of  Pomo 
Indians  and  the  Cloveraale  Pomo  Indi- 
ans in  Nonhem  Califorma.  ana  the  Rat- 
ponage  First  Nation  near  Kenora  m  On- 
tano.  His  firm  also  plans  to  manage  a 
bingo  hall,  set  to  open  this  weeK.  for  the 
Seneca-Cavuga  tnbe  in  Mi- 
ami. Okla. 

The  stn|>-4iar  owner.  Res- 
taurant owner  Robert  Sabes 
was  well  known  in  Minne- 
iDolis  as  a  millionaire  busi- 
nessman. So  locals  were 
narolv  suronsea  wnen  ne  cre- 
-jiea  a  successnii  casmo  man- 
^eement  iirm  called  Gaming 
Corp.  01  America.  But  trou- 
oles  began  inis  spring  wnen 
Mississiopi  earning  regula- 
lOrs  leameo  tnat  Sabes  owns 
J  topless  Bar  m  Minneapohs 
where  the  entertainment  was 
managed  bv  Michael  Peter,  a 
flashv  South  Honda  million- 
aire with  a  nationwide  chain 
ot  stnp-tease  oars  called  Sol- 
id Gold.  Peter  was  indicted  m 
1991  on  exionion  and  Icidnap- 
pme  charges,  and  the  case  is 
pending  m  state  coun.  Fed- 
eral agents  seized  thousands 
01  Peter  s  documents  at 
.iDOut  the  same  time,  citing 
concern  over  txjssibie  orga- 
nizea-cnme  ties.  No  federal 
charges  nave  oeen  filed. 

Sabes  denies  anv  mob  links  and  says 
he  had  "an  arm  s  length"  relationship 
with  Peter.  But  the  embarrassment  and 
the  licensing  delays  to  come  persuaded 
Sabes  to  sell  his  Gammg  Cort3.  stock 
last  April  and  leave  the  publiciv  traded 
firm.  Althougn  one  tnbe  quicklv  cut  all 
lies  to  the  restaurateur,  others  contmue 
to  seek  his  busme&s.  Earlv  last  month. 
Saties  won  prelimmarv  approval  from 
.Arizona  s  Vavapai-Apacnes  to  manage 
their  proposed  casmo  nonn  of  Phoenut. 

New  evidence  oi  a  more  troubling  rcla- 
tionshiD  mav  jeopardize  those  oians.  too. 
1  In  testimonv  10  the  Wisconsin  Wjnneba- 
;  \  go  gaming  commission  released  this 
month.  Sabes  admits  also  doing  business 
with  James  Williams,  a  partner  m  Peter  s 
stno-oar  emoire  ana  once  a  major  bingo 
hall  operator  tor  Indian  tnbes  and  chan- 


ties from  California  to  Flonda.  Williams 
was  convicted  in  1987  ot  failing  to  pay 
taxes  on  some  $300,000  he  earned  from 
bingo  halls.  Flonda  police  records  call 
him  a  "close  associate"  of  Anthonv  Ac- 
cctturo  s.  whom  the  FBI  has  identified  as 
a  capo,  or  boss,  of  the  Thomas  Luchese 
crime  lamily  of  New  York.  Williams,  who 
did  not  return  phone  calls,  admits  m  the 
police  files  only  to  meeting  Accetturo 
three  times  in  the  1970s. 

In  a  recent  mterview,  Sabes  admined 
that  he  siened  papers  with  Williams  as 
early  as  Nov.  9.  1988.  That  was  just 
four  months  before  Williams  was 
locked  up,  prison  officials  sav.  But  he 
savs  he  did  not  learn  of  Williams  s  con- 


cominission  report  claims  cenain  bingo 
operations  m  the  ^oungsiown.  Ohio. 
area  "are  obbgated  to  purcnase  bingo 
supplies  from  Nannicola. ' 

Nannicola  says  his  firm  sells  supplies  in 
25  sutes  and  got  the  Tamiami  contract 
because  of  supenor  service  and  pnce.  He 
demes  that  his  father-in-law  or  his  busi- 
ness has  mob  ties:  "The  Pennsylvania 
Crime  Commission  should  get  some  new 
employees  and  some  new  mformation. 

Despite  the  allegauons.  the  National 
Indian  Gammg  Commission  has  never 
done  a  background  check  on  Nanmcola 
Wholesale  or  Tanaatni  Partners.  One 
reason:  Although  Congress  created  the 
commission  five  years  ago  to  regulate 


Mlnaeiou  l«t».  Mvstic  Lake  casino  rtponedty  earns  each  mbal  memoer  up  to  $20,000  a  morun. 


viction  or  alleged  Mafia  ties  until  1990. 

Tha  btaso  papw  sappttir.  When  Flon- 
da's  Miccosukee  Indians  opened  a  2.000- 
seat  bingo  hall  west  of  Miami  m  1991,  they 
hired  Tamiami  Panners  to  run  it.  Two 
years  later  the  tnbe  kicked  the  firm  out. 
allegmg  mob  ties.  Tamiami  parmer  Cye 
Mandel  denies  the  charges  and  has  sued 
the  tnbe  for  cuttmg  hun  out  of  the  ven- 
ture, which  last  year  grossed  S35  million. 
One  ihmg  is  sure:  Tamiami  did  sign  a 
contraa  with  a  bingo  paper  supplier  au- 
ihonties  have  linked  to  the  mob. 

After  a  bidding  process,  Tanuami  be- 
gan buving  supplies  from  Frank  Nanni- 
cola of  Warren,  Ohio.  Nannicola  is  the 
son-in-law  of  Charles  Imburgia,  who,  ac- 
cording to  the  Pennsylvania  Crime  Com- 
mission, IS  a  member  of  the  Genovese 
crime  family  in  Pittsbureh,  A  1992  crime 


Indian  gaming,  its  rules  didn't  take  effect 
until  six  months  ago.  The  commission  has 
a  massive  backlog  of  old  and  new  man- 
agement contracts  to  review. 

Just  such  snags  prompted  members  of 
Congress  to  meet  this  summer  to  discuss 
tightenmg  Indian  gamblmg  laws,  and  a 
new  Senate  bill  likely  will  be  introduced 
next  month.  National  Indian  Gammg  As- 
soaation  Chairman  Rick  Hill  says  the 
tnbes  want  the  cleanest  industry  possi- 
ble. But  thev  also  want  to  ensure  that  a 
few  questionable  charaaers  do  not  bnng 
rum  to  an  industry  that  employs  thou- 
sands and  has  nelped  tnbes  build  mucn- 
needed  scnools.  hospitals  and  homes. 
"It's  a  bread-and-butter  issue, '  Hill  savs. 
"We  need  Indian  gammg  to  survive. "   a 

BY  James  PcPMN 

USNEWS  &  WORLD  RITOFT.  AUJUST  a  199B 


224 


^:S:N6=^2;«/5 


?AGS         i 
:rd  story  oi  LavsX  1  printed  in  FULL  fomat. 

i>roprl*tary  ro  the  anitsd  Praas  International  1993 

January  37,    :.992,   Monday,   3C  cycle 

JECTIONi   :ieqional  Neva 

OZSTKIBUTION:    Illlnola 

LSNGTH:   SSO  worda 

:{SXDLZNSi   Jleputad  Ctiicacre  veto  boaaea  arraigned 

3YUNE:    3y  HILMER  ANDSIUOM 

3ATELZin::    SAK   DIEGO 

.BYWORD:    CA-KOB 

300YX 
Saa  "Winga"  Carliai,  ^he  reputed  acting  boaa  of  CHlcage'a  Mafia  accused 
oi   trying  to  take  over  gambling  operatlona  on  an  Indian  reaervation,  pleaded 
innocent  to  racketeering  cAargea  Monday  along  with  a  group  of  alleged 
Ileutenanta  and  aaaooiatea. 

carliai  appeared  before  U.S.  Slatrict  Judge  Willlew  £.  2nrlght  for  the 
firat  tiae  aince  be  vaa  indicted  Jan.  lO  with  eight  other  defendanta,  including 
alleged  aobstera  John  OiFronxo,  2on  Angellni  and  Michael  Caracci. 

The  nine  defendanta  aat  quietly  aaong  the  handful  of  apectatsra  in  Enright'a 
sourtrooa  until  it  vaa  their  turn  to  crowd  around  the  podiua  with  an  equal 
nuBber  of  attorney a. 

Zlght  pleaded  Innocent,  rhe  ninth,  Chria  ?etti,   ^sleaded  innocent  laat  vaak 
ind  vaa  in  court  for  a  oail  hearing. 

'It  vaa  kind  of  nice  co  aee  seme  of  ay  old  acquaintancaa  up  there,"  said 
Art  ?hlzenaayer,  the  head  of  the  FBI 'a  organized  crime  unit  in  San  Diego  vho 
larliar  had  worked  in  Chicago. 

3«cauee  the  caae  la  baaed  primarily  on  several  thouaand  pages  of  wiretaps 
ind  supporting  documenta,  It  ia  expected  to  take  several  months  to  reach  trial. 

A  motion  hearing  vaa  scheduled  for  June  a. 

carliai   ia  the  lead  defendant  in  a  15-count  indictment  that  accuaea  the 
sob  of  trying  to  gain  control  over  gaabling  operatlona  at  a  planned  caaino  on  an 
Indian  reservation  easi  of  San  oiego. 

.ia  was  described  in  the  indictment  aa  a  ''':rew  cnief'  vho  ran  iihinqs  on 
Chicaqe''a  West  Side  for  the  organization,  fsundad  by  Al  Capone,  untiil  1987  vnen 
le  was  anointed  aoting  boss  after  Joaaph  Aluppa  and  undarboss  Jack  Cerone  war* 
sent  to  prison  and  heir-apparent  Joeepn  Famola's  health  deterierataa. 

rhe  alleged  plan  to  take  over  gambling  at  the  Rincon  Indian  Reaervation  vaa 
-^resented  to  the  moo  leaoerahlp  througn  Caracci  by   ?etti,  i   Cicero,  :il.. 


225 

jgi^r  by:  :   b-  4-93    ;n:33AI«    ;  LAW     C=Fi:£5-'  CLAP?  EIScNBER3;827 


PACE    7 
Proprietary  to  the  unltsd  press  International,  January  27.  1992 

tiv«  whom  authorltisa  b«li«v*  has  bawi  tba  faaily'a  man  in  San  Dlago  alnea  tha 
70a. 

Patti  allaqadly  oenaplrad  to  win  tha  aanageaant  contract  with  Glan  Calac, 
s  contaot  on  tha  raaarvatlon,  and  Nlcholaa  Da  Panto,  a  San  Oiago  lawyar  who 
alt  with  tha  Sincon  Tribal  Cotinoil  on  Fatti's  bahal£. 

Patti'a  alla^ad  uanatrvaringa ,  howavar,  wara  aonitorad  by  tha  FBI  and  San 
age  lav  enf oroaaant  of f icars  who  wara  authorizad  to  conduct  ' ' roving 
rataps"  that  allowad  thaa  to  liatan  in  on  phona  calls  sada  at  pay  pbonas  and 
OB  0«  Panto's  offioa. 

"Tha  dafandant  (  Pattl)  usas  tha  phona  to  coaait  hia  criaaa,"  Asaiataat 
B.  Attomay  Carol  Laa  told  Enright. 

Carlisi,  OlFronso  and  Angalini  allagadly  vara  villing  to  put  up  aenay  for 
•  allagad  takaovar  atteapt  and  bad  a  Florida  aan  pickad  out  to  act  aa  aanagar, 
t  thay  pullad  out  latar  bacauaa  thay  vara  loaing  aonay  on  a  siailar 
sarvation  caalno  in  Baltiaora. 

Tha  vhite-halrad  Angalini,  in  court  on  tha  day  aftar  tha  Supar  Bovl,  is 
etar  known  in  lav  antorcaaant  cirolas  as  ''Tha  Nicard  of  Odda,"  tha  aan  who 
La  tha  vital  sports  batting  linas  that  are  used  by  bookaakcrs  acroaa  the 
intry. 

Tha  indietaant  also  oontaina  extortion  charges  steaaing  froa  Petti 'a 
Lagad  efforts  to  collect  aoney  froa  gaablers  with  the  help  of  co-  defendants 
raen  and  Anthony  Di  Nunzio  of  Los  Angeles  and  John  Spilotro. 

Spilotro,  identified  as  a  aob  aaaooiate  froa  Laa  Vegas  and  brother  of  tha 
:a  Tony  "The  Ant"  Spilotro,  the  aob's  reputed  overseer  in  Las  Vegas  vho  was 
rdared  in  1»86. 

All  of  the  defendanta  except  carraoi,  Petti  and  Anthony  DiNunzio  have  been 
le  on  bond.  Caraen  Di  Nunslo  reaalns  a  fugitive. 


226 


PAGE 

1ST  STORY  of  Level  2  printed  in  FULL  format. 

Copyright  1993  Star  Tribune 
Star  Tribune 

July  4,  1993,  Metro  Edition 

SECTION:  News;  Pg.  lA 

LENGTH:  27  3  3  words 

HEADLINE:  Winnebago  case  illustrates  casino  business  gone  awry 

BYLINE:  Pat  Doyle;  Staff  Writer 

DATELINE:  Madison,  Wis. 

BODY: 

Tribal  tensions,  shootings  and  arson  erupted  while  Glenn  Corrie  managed  a 
Wisconsin  Winnebago  Nation  casino.  His  guilty  plea  to  bribery  closed  a  phase  o 
a  case  that  offers  a  rare  look  at  a  business  gone  awry. 

Two  dozen  American  Indians  sat  on  benches  in  the  courtroom,  silent  spectato. 
in  one  of  the  last  acts  of  a  drama  about  temptation  and  corruption. 

They  watched  Chicagoan  Glenn  Corrie,  burly  and  bearded  in  a  gray  shirt,  tii 
and  sport  coat,  sitting  at  the  defense  table.  Was  it  true  he  once  controlled 
lucrative  Indian  casinos  by  paying  some  tribal  officials  up  to  $  120,000  in 
bribes? 

"No  doubt  it  was  more,  your  honor,"  Corrie  said. 

In  pleading  guilty  last  month  in  federal  court  to  bribery,  Corrie  closed  a 
crucial  phase  of  a  case  that  offers  a  rare  look  at  a  casino  business  gone  awry 

For  nearly  two  years  the  Wisconsin  Winnebago  Nation  lost  control  of  a 
fledgling  business  born  of  tribal  sovereignty.  Longstanding  tribal  tensions 
erupted  under  Corrie' s  management,  climaxing  with  shootings  and  arson  at  the 
tribe's  casino  near  the  Wisconsin  Dells.  - 

While  other  tribes  were  parlaying  casino  profits  into  public-works  project: 
or  monthly  revenue-sharing  checks,  the  Winnebago  were  paralyzed  by  turmoil.  Tht 
ramifications  continue  even  as  the  tribe  today  reports  success  under  new  casinc 
management. 

The  Indians  are  still  trying  to  recover  the  $  2  million  Corrie  was  paid  ~^ 
while  illegally  managing  the  casinos.  Federal  and  tribal  officials  say  they 


can't  account  for  another  S  3.7  million  in  casino  revenue  intended  for  the 

tribe. 

And  prosecutors  expect  to  charge  tribal  members  this  summer  with  taking 
bribes  from  Corrie. 


/ 


r 


In  Indian  communities  where  one  in  four  adults  was  jobless,  the  temptation 
of  casino  money  was  powerful,  said  tribal  member  Orbert  Goodbear. 


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star  Tribune,  July  4,  1993 

"When  I  was  a  kid,  my  grandparents  used  to  sell  baskets  along  the  highway,' 
Goodbear  said.  "Our  people  don't  come  from  a  prosperous  background,  and  for  tht 
reason,  money  sways  people.  I  don't  approve  of  it,  but  I  understand  it." 

The  Winnebago  experience  is  perhaps  the  clearest  illustration  yet  of  the 
challenge  facing  the  federal  government.  It  must  regulate  casinos  to  protect 
Indians  without  violating  the  autonomy  of  Indian  tribes. 

The  Wisconsin  Winnebago  have  4,700  members,  about  half  of  them  living  in 
western  and  central  Wisconsin.  Other  members  settled  mainly  in  southeastern 
Minnesota,  the  Twin  Cities,  Madison  and  Milwaukee. 

Their  legacy  is  tragic  even  in  the  context  of  American  Indian  history.  In 

the  iseos  the  federal  government  forcibly  moved  the  Winnebago  people  from 

Minnesota  to  the  Dakota  territory  and  later  sent  other  members  from  Wisconsin  • 

Nebraska.  Many  starved  or  froze  to  death. 

"The  case  of  these  Winnebago  Indians  is  one  of  peculiar  hardship,"  a  feder. 
official  for  Indian  affairs  wrote  in  1863. 

Some  among  the  Winnebago  returned  to  Wisconsin,  where  today  their 
descendants  live  on  parcels  of  land  held  in  trust  by  the  Department  of  the 
Interior.  In  the  1980s  the  Winnebago  were  running  successful  bingo  games  on  so: 
of  that  land  when  the  Supreme  Court  and  Congress  allowed  tribes  to  start  a  mor. 
lucrative  and  tantalizing  business:  Vegas-style  casino  gambling.  The  ventures 
promised  to  reduce  poverty  in  Indian  communities. 

But  the  new  opportunity  also  stimulated  the  appetite  of  outsiders  looking 
for  a  piece  of  the  action. 

One  of  those  was  Corrie.  He  is  48  years  old  with  a  formal  education  that 
ended  in  his  freshman  year  of  high  school.  For  years  he  had  operated  out  of 
suburban  Chicago,  supplying  gambling  equipment  to  Illinois  charities.  In  early 
1990,  as  tribes  ventured  into  casino  gambling,  Corrie  headed  to  Wisconsin. 

He  checked  out  several  tribal  casinos  before  getting  involved  with  the 
Winnebago.  He  learned  that  some  tribes  were  sophisticated,  while  others  were 
struggling  with  the  basics. 

At  the  Menominee  Reservation,  "The  dealers  were  running  into  a  room  watchi: 
a  videotape  trying  to  learn  what  they  were  supposed  to  be  doing,"  Susan  Kelled- 
a  Corrie  associate,  said  in  a  deposition.  "Glenn  had  mentioned  that  they  reall 
didn't  know  what  they  were  doing  .  .  .  were  probably  losing  a  lot  of  money." 

Corrie,  through  his  lawyer,  declined  to  comment  last  week  about  his 
operations.  In  court  proceedings  he  cited  Fifth  Amendment  privileges  against 
self-incrimination  to  deflect  questions  about  his  operation,  his  past  employraer 
and  other  issues. 

But  sworn  depositions  and  interviews  with  his  associates,  casino  employees, 
prosecutors,  police  and  tribal  officials  offer  a  look  at  how  the  Winnebago 
casinos  worked  -  and  didn't  work. 

Corrie,  operating  as  the  Jenna  Corp.,  began  managing  casinos  near  Wisconsii 
Dells,  Nekoosa  and  Black  River  Falls  for  the  Winnebago  in  May  1990.  His 


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star  Tribune,  July  4,  1993 

contract  for  up  to  40  percent  of  the  profit  was  more  than  typically  allowed 
under  federal  law.  The  Interior  Department  later  said  the  cut  was  too  generous 
and  criticized  other  provisions  beneficial  to  Corrie. 

But  Corrie  would  manage  the  casinos  for  the  next  2  0  months  without  the 
necessary  federal  approval. 

Jeffrey  Behnke  worked  in  construction  and  waited  tables  before  landing  a  jc 
as  a  security  officer  at  the  Ho-Chunk  casino  near  Wisconsin  Dells.  Within  three 
months,  Corrie  promoted  Behnke,  who  is  not  a  tribal  member,  to  be  a  manager  of 
the  casino,  the  tribe's  largest. 

"You  went  from  no  experience  to  management?"  Assistant  U.S.  Attorney  Mark 
Cameli  asked  him  during  a  deposition. 

"It  was  a  moron's  job,"  Behnke  replied. 

In  any  case,  the  management  of  the  Ho-Chunk  ran  into  problems. 

Samantha  Day,  a  tribal  member  who  worked  at  the  Ho-Chunk,  said  money  eraptit 
from  gambling  machines  sometimes  didn't  jibe  with  the  machines'  meters.  On  at 
least  one  occasion,  Corrie  associates  from  Las  Vegas  told  employees  not  to  mine 
the  discrepancy;  they'd  sort  it  out. 

Tribal  representatives  were  on  hand  to  monitor  the  money,  but,  "They  were 
more  confused  than  I  was,"  Day  testified.  "They  never  knew  how  to  do  the 
paperwork  at  all.  They  never  saw  it." 

Cameli  asked  Day,  "What  kind  of  check  and  balance  did  the  tribal  employees 
have?" 

"The  representatives  never  really  did,"  Day  replied. 

She  also  said  the  casino  lent  money  to  bettors  without  a  clear  policy. 
"Sometimes  they  took  chips  right  off  the  table,"  Day  said.  "Sometimes  they  got 
the  money  from  the  cashiers." 

She  recalled  a  businessman  from  the  Wisconsin  Dells  receiving  S  1,300  in 
credit.  Another  person  "would  go  right  into  the  office  and  get  chips  and  play. 

"We  were  told  if  we  didn't  treat  these  people  good,  we  would  get  fired.  It 
was  mostly  people  [the  management]  thought  spent  a  lot  of  money.  It  didn't 
matter  how  much  credit  they  wanted,  you  were  to  give  it  to  them." 

Corrie  paid  the  motel  bill  for  a  regular  customer  who  stayed  overnight,  anc 
handed  out  cards  allowing  others  to  bill  him  for  meals  at  local  restaurants.  Da 
said. 

A  woman  who  joined  Corrie  on  a  trip  to  Las  Vegas  "came  in  and  wrote  out  a 
check  for  their  expenses.  She  cashed  it  right  there  at  the  casino.  No  one 
questioned  her." 

Day  told  of  times  when  an  influential  tribal  member  "would  be  really  angry 
.  .  and  call  [Corrie]  up  and  say,  'You  will  lose  my  support.'  Half  an  hour  late 
a  check  would  come  in  to  him  .  .  .  and  they  cashed  it  right  there." 


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star  Tribune,  July  4,  1993 

The  rewards  for  backing  Corrie  were  sometimes  visible.  Tribal  members  still 
talk  about  favored  Indians  being  allowed  to  drive  Corrie' s  Cadillac  around  tne 
reservation. 

"There  was  an  atmosphere  of  corruption,"  Goodbear  said.  "It's  common 
knowledge  that  if  someone  is  a  [tribal]  area  representative,  his  friends  get  a 
job.  " 

Tribal  members  who  didn't  support  Corrie  say  they  saw  few  benefits  from  the 
casino.  Instead,  they  saw  basic  tribal  services  decline. 

Helen  Cloud,  58,  said  her  federally  subsidized  payments  for  diabetes 
medication,  funneled  through  a  tribal  health  clinic,  were  interrupted. 

"We're  poor  as  it  is,"  said  her  husband,  Jake,  66.  "They  couldn't  buy  me  fo 
any  amount  of  money.  I'm  glad  I  was  on  the  other  side.  He  paid  the  boys  off." 

Turmoil  among  the  Winnebago  didn't  begin  with  Corrie.  But  Gome's 
management  of  the  casinos  fanned  tensions  to  a  flashpoint. 

It  wasn't  long  before  allegations  surfaced  that  he  used  patronage  ]obs, 
kickbacks  of  cash  and  gifts  and  other  favors  to  maintain  political  support  from 
some  Winnebago. 

"When  Glenn  Corrie  came  into  our  midst  and  began  to  influence  some  of  the 
tribal  members,  he  began  the  process  of  corrupting  our  whole  tribal  government, 
said  JoAnn  Jones,  who  won  election  in  1991  to  tribal  chair  on  a  campaign  to 
evict  Corrie. 

Soon  the  Winnebago  Nation  became  so  divided  over  Corrie  that  its  government 
disintegrated,  failing  to  muster  a  quorum  to  conduct  tribal  council  meetings. 

Without  a  tribal  government  it  could  recognize,  the  U.S.  Bureau  of  Indian 
Affairs  (BIA)  slowed  S  1  million  in  federal  money  intended  for  Winnebago 
members.  The  BIA  said  the  disintegration  of  tribal  government  also  made  it 
impossible  to  approve  a  casino  management  contract  -  even  if  one  existed  with 
terms  more  favorable  to  the  tribe. 

But  Corrie  didn't  stop  for  lack  of  BIA  approval.  He  had  enough  support  amon 
some  tribal  officials  and  a  security  force  to  stay  in  business. 

Tension  erupted  a  year  into  his  tenure  when  tribal  chair  Jones  led  100 
followers  to  the  Ho-Chunk  in  the  first  of  a  series  of  confrontations.  During  th 
next  six  months,  combatants  brandished  ax  handles,  blockaded  entrances,  fired 
guns  and  hauled  a  hangman's  noose  to  the  casino. 

"I  could  see  bloodshed  coming,"  said  Sauk  County  Sheriff  Virgil  (Butch) 
Steinhorst,  who  lacked  authority  to  investigate  tribal  complaints. 

At  first,  the  BIA,  unsure  of  who  really  represented  the  Winnebago,  avoided 
moving  against  Corrie.  His  c-ponents  converged  on  the  BIA  offices  in  Minneapoli 
in  protest. 

Jones  kept  up  the  pressure  and  after  months  of  turmoil  the  BIA  asked  the 
Justice  Department  to  intervene.  The  Justice  Department  moved  to  evict  Corrie, 


230 


star  Tribune,  July  4,  1993 

the  first  time  it  had  taken  such  action  against  the  manager  of  a  tribal  casino 
in  the  Upper  Midwest. 

The  U.S.  attorney  in  Madison  declared  that  Corrie  "threatens  the  economic 
security  and  well-being  of  the  tribe"  by  operating  without  a  federally  approvec 
contract.  Corrie's  lawyers  pitched  a  federal  judge  a  remarkable  defense:  Becaui 
the  Winnebago  no  longer  had  a  functioning  government,  they  couldn't  enter  into 
contract.  Therefore,  there  was  nothing  for  the  BIA  to  approve  or  reject. 

U.S.  District  Judge  John  Shabaz  was  having  none  of  it.  Calling  the  tactic 
"sopnistry"  and  a  "ridiculous  argument,"  Shabaz  kicked  Corrie  out  of  the 
Winnebago  casinos  and  ordered  him  to  return  S  2  million  in  management  fees  to 
the  Winnebago. 

The  two  sides  had  a  final  standoff  at  the  Ho-Chunk.  Corrie  allies  barricaat 
themselves  inside  the  casino  with  chairs  and  cigarette  machines.  Two  tribal 
members  were  wounded  by  gunfire,  allegedly  from  a  Jones  supporter.  Another  Jont 
supporter,  Steve  Funmaker,  filled  juice  bottles  with  gasoline  and  started  a 
fire. 

"I  did  [it]  ...  so  Corrie  couldn't  get  ahold  of  it  again,"  saia  FunnaKer 
who  is  serving  a  33-raonth  prison  term  for  the  arson,  which  caused  minor  aamage 
and  no  injuries.  "Why  should  he  have  the  benefit  of  the  proceeds  from  that  at 
the  expense  of  tribal  people?" 

The  court  order  ended  casino  business  for  Corrie.  Today,  the  tribal 
government  is  running  again,  and  the  tribe  reports  that  its  casino  business  ha; 
expanded,  tripling  the  number  of  ]obs  that  existed  two  years  ago  and  financing 
new  tribal  enterprises. 

The  BIA's  area  director  Earl  Barlow  and  Wisconsin  area  super intenaent  Robe; 
Jaeger  recently  visited  Winnebago  communities.  "We  were  both  quite  inpressed  a" 
the  progress  they  were  making,"  Jaeger  said.  He  said  the  casinos,  now  managed  . 
firms  that  receive  a  lower  cut  than  Corrie,  are  succeeding. 

"We  have  not  fully  recovered,  but  we  have  made  progress  and  we  nave 
learned,"  Jones  told  a  U.S.  House  subcommittee  last  week  ac  a  hearing  on  India, 
casino  gambling  in  Oneida,  Wis. 

One  thing  the  Winnebago  haven't  recovered:  the  $  2  million.  Corrie  hid  his 
assets  in  bankruptcy  proceedings,  a  bankruptcy  trustee  said. 

In  the  living  room  of  Helen  and  Jake  Cloud's  home  near  Lake  Delton,  tomahawi 
and  eagle  feathers  hang  near  a  display  of  American  flags  on  pedestals,  a  fitti; 
arrangement  for  citizens  of  two  nations. 

The  Clouds  and  other  Winnebago  watched  their  tribal  government  cisintegratc 
into  anarchy  in  the  dispute  over  Corrie.  They  waited  for  their  other  nation  to 
intervene. 

Just  .how  much  regulation  the  federal  government  should  exercise  over  India; 
casinos  is  a  matter  of  debate  in  Congress  and  among  tribal  memDers.  -auaaole  di 
sometimes  competing  goals  collide:  respecting  tribal  independence  while 
preventing  exploitation. 


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star  Tribune,  July  4,  1993 

"There's  a  difficult  balance  the  government  has  to  reach  between  recognizir. 
autonomy  within  Indian  nations  and  regulating  gaming  operations  so  the  tribes 
benefit  the  most,"  Cameli  said. 

Federal  prosecutors  haven't  intervened  in  every  instance  in  which  casino 
management  firms  operated  without  first  obtaining  BIA  approval.  The  Justice 
Departmem:  took  action  with  the  Winnebago  case  because  the  potential  for  trouDl 
vas  greater. 

"You  look  at  the  cases  that  present  the  greatest  threat,"  Assistant  U.S. 
Attorney  Cameli  said.  "Unlike  the  other  tribes,  where  at  least  the  governing 
bodies  agreed  to  hire  a  company,  you  had  the  tribe  sharply  diviaed  over  the 
presence"  of  Corrie. 

The  tribe's  experience  with  Come  occurred  while  Indian  gaming  was  under 
the  jurisdiction  of  the  BIA,  wnich  complained  it  had  limited  powers  co  regulate 
casinos.  Recently  the  National  Indian  Gaming  Commission  has  taken  over  the  tod. 

"I  think  oefore  it  becomes  a  smooth  ooeration  it  will  go  c.nrougn  r.any 
refinements,"  Cameli  said.  "It's  different  than  anyt.^iinq  else  the  government's 
oeen  involved  in." 

The  commission  was  designed  to  regulate  tribal  gaming.  It  has  powers  the  51 
lacked  and  should  do  better,  said  Jaeger,  the  BIA's  Wisconsin  superincenaent . 

Many  tribal  members  are  ambivalent  about  federal  regulation  of  casinos. 
When  asked  what  he  thought,  Goodbear  said,  "I  think  the  federal  government 
should  let  the  tribes  operate  indeoendently . "  Then  he  paused,  and  added,  "But  c 
the  other  hand,  I  think  the  federal  government  has  a  responsibility  to  make  sur 
these  tribes  don't  get  into  messes.  I  think  there  should  be  close  accounting 
done  on  these  casinos." 

Corrie  faces  the  prosoect  or  following  his  adversary,  FunmaKer,  to  prison.  . 
^las  agreed  to  cooperate  with  federal  prosecutors  in  their  investigation  or 
tribal  orficiais  wno  toox  illegal  payments.  He  also  will  reveal  assets  m  t.ne 
oankruptcv  case.  He  wasn't  always  so  talkative.  Cameii  once  oegan  a  deposition 
by  posing' a  seemingly  simple  question:  How  long  had  Corrie  livea  m  Wisconsin? 

"I  respectfully  refuse  to  answer  that  questi^^n  on  the  grounds  it  may  tena  t 
incriminate  me,"  Corrie  replied. 

Said  Goodbear' s  wife,  Barbara:  "I  think  Glenn  Corrie  is  going  to  bargain 
vith  the  federal  government,  turn  in  a  bunch  of  names  and  get  less  time." 

Corrie's  attorney,  Jeffrey  Steinoack,  said  that  his  client  doesn't  deserve 
all  of  the  blame  for  the  fiasco  and  that  he  tried  to  help  the  tribe  manage  the 
new  business.  "I  always  thougnt  bribery  was  the  other  side  of  the  com  from 
axtortion,"  Steinback  said. 

In  the  courtroom  in  Madison  last  month,  Jones  and  otners  vno  rougnt  to  oust 
Tome  listened  as  Assistant  U.S.  Attorney  John  Vaudreuil  described  the 
corruption.  There  were  envelopes  of  cash  for  tribal  officials,  cnecks  issuea  tc 
-he  sister  of  one  tribal  official.  A  $  1,000  check  was  made  out  for  the 
fictitious  purchase  of  a  trailer.  Corrie  handed  out  S  300  to  S  500  when  tribal 
.-Tiemoers  asKed  for  "a  pack  of  cigarettes." 


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star  Tribune,  July  4,  1993 

Out  in  the  hall,  Dallas  Whitewing  said  Corrie  offered  him  money  and  a  job 
after  he  won  a  seat  on  the  trioal  council.  Whitewing  said  he  took  the  money, 
gave  it  to  a  charity  and  went  to  work  for  Jones.   "All  the  influence  Corrie 
thought  he  had,"  Whitewing  said,  "it's  gone." 

GRAPHIC:  Photograph;  Map 

SUBJECT:  bribery;  investigation;   Indian;  gambling;   finance 


233 

Mr.  Richardson.  The  gentleman  from  Wyoming. 

Mr.  Thomas.  Thank  you,  Mr.  Chairman. 

I  have  just  some  brief  questions,  and  if  you  have  brief  answers, 
that  could  be  nice. 

Mr.  Torricelli,  I  am  pleased  that  you  are  as  interested  in  the 
States'  role.  That  is  not  always  the  case  here  in  the  Congress. 

Many  of  the  compacts  have  included  agreements  on  taxes,  on 
regulation.  Why  didn't  New  Jersey  enter  into  one  of  those? 

Mr.  Torricelli.  Well,  in  fact,  New  Jersey  has  not  yet  been  sued. 
My  guess  is,  we  are  going  to  have  a  problem  in  New  Jersey  if  the 
Ramapough  Indians  are  able  to  establish  themselves  as  a  legiti- 
mate tribe.  They  will  go  to  court,  and,  under  the  current  state  of 
Federal  law,  have  a  very  good  chance  of  succeeding,  in  which  case 
New  Jersey  will  have  an  unregulated  casino,  untaxed,  to  compete 
with  our  other  18  casinos — 12  casinos. 

Mr.  Thomas.  So  you  don't  have  any  tribes  that  qualify  under  the 
law  now? 

Mr.  Torricelli.  No,  but  unfortunately  we  are  getting  very  close 
in  what,  in  my  judgment,  is  an  aberration.  We  do  not  actually  have 
any  legitimate  Indian  tribes  in  New  Jersey,  in  my  judgment. 

Mr.  Thomas.  Mr.  Trump,  you  have  not  concealed  your  concern 
about  competition  with  your  investments,  and  I  understand  that. 
Would  you  be  satisfied  if  the  State  regulated  these  other  casinos? 

Mr.  Trump.  Well,  I  think  that  it  is  a  very  sad  thing  for  the 
States.  I  can  tell  you  that  I  believe  it  is  49  out  of  50  governors  are 
totally  against  what  has  taken  place. 

I  know  that  for  a  fact  Governor  Cuomo  was  forced  to  sign  a  pact 
that  he  totally  didn't  want  to  sign.  The  communities  are  up  in  arms 
in  upstate  New  York,  totally  up  in  arms,  and  it  has  just  gotten  out 
of  control. 

You  see,  I  have  a  very  big  psychological  problem  here.  I  really 
don't  know  if  it  is  possible  to  protect  all  of  the  people  from  all  of 
these  reservations.  You  have  too  many  sources  in  terms  of  orga- 
nized crime,  you  have  just  too  many  places,  and  so  we  can  say, 
well,  we  will  put  500  FBI  agents  on  each  reservation.  But  from  a 
practical  standpoint  you  can't  do  that. 

So  with  all  of  these  reservations  opening  up,  and  literally  open- 
ing up  on  a  daily  basis,  it  seems  to  me,  I  don't  know  if  it  is  phys- 
ically possible,  physically  possible,  for  law  enforcement  to  any 
longer  protect. 

Before,  you  had  Las  Vegas  and  you  had  Atlantic  City,  and  I  used 
to  hear  stories  that  there  were  more  agents  assigned  to  Las  Vegas 
and  Atlantic  City  than  to  any  other  major  city  in  the  United 
States.  Now  I  don't  know  if  that  is  correct  or  not,  but  I  believe  it 
was  very  correct.  In  fact,  it  was  even  a  substantial  amount  more. 

I  don't  believe  that  you  have  enough  people  when  you  start  get- 
ting into  this  many  reservations.  The  money  is  too  much,  and  it  is 
there,  and  it  is  too  easy.  It  is  too  easy  to  skim  if  you  don't  have 
the  right  law  enforcement.  It  is  too  easy  to  skim  if  you  don't  have 
the  right  procedures.  It  is  too  easy  to  launder  money  if  you  don't 
have  the  right  procedures  and  the  right  law  enforcement. 

So  I  think  you  folks  have  a  real  problem.  I'll  be  honest.  I  think 
you  have  a  real  problem.  You  created  a  monster.  When  you  were 
in  Las  Vegas  and  when  you  were  in  Atlantic  City,  you  had  two 


234 

places,  and  you  can  have  500  agents  in  each  place,  and  you  can  do 
your  number.  But  when  you  start  having  100  and  150  locations  all 
over  the  place,  I  think  you  have  created  yourself  a  real  mess. 

Mr.  Thomas.  So  you  have  basically  opposed  to  gambling  outside 
of  Atlantic  City  and  Las  Vegas? 

Mr.  Trump.  I  am  opposed  to  gambling  when  it  can't  be  policed, 
and  I  don't  believe  the  Indian  reservations  can  be  policed,  there's 
too  many  of  them,  and  especially  when  people  claim  sovereignty 
when,  in  fact,  there  is  nothing  sovereign.  It  is  only  sovereign  in 
that  they  don't  pay  taxes. 

Mr.  Thomas.  Someone  indicated — ^it  wasn't  you,  obviously — that 
casinos  were  very  concerned  about  their  image;  if  it  became  known, 
as  you  say  it  is  generally  known,  that  organized  crime  is  there, 
they  wouldn't  patronize  them.  Wouldn't  that  be  the  case?  Why  are 
you  concerned? 

Mr.  TllUMP.  Well,  I  am  very  concerned  about  the  Indians'  image 
in  terms  of  gaming  because  when  it  blows — and,  as  I  said  before, 
it  will  blow — that  is  going  to  taint  the  entire  industry,  including 
Atlantic  City  and  including  Las  Vegas. 

When  it  is  learned  about  the  laundering  and  all  of  the  skimming 
and  all  of  the  cheating  and  everything  else  that  can  go  on  unabated 
at  the  Indian  reservations,  people  aren't  going  to  say  that  is  just 
Indian  reservations,  they  are  going  to  say  that  is  Atlantic  City, 
that  is  Las  Vegas,  despite  the  fact  that  Trump  has  hundreds  and 
hundreds  of  people  in  each  casino  policing  and  making  sure  every- 
thing is  legit,  they  are  not  going  to  say  that.  They  are  going  to  say 
that  gaming  is  a  dirty  business,  look  what  happened  at  this  par- 
ticular casino. 

So  when  it  blows,  it  is  going  to  be  a  huge  story.  There  is  no  doubt 
about  the  fact  it  is  going  to  blow.  It  is  just  a  question  of  time.  But 
that  is  going  to  taint  the  whole  industry,  including  the  legitimate 
industry. 

Mr.  Thomas.  Thank  you,  Mr.  Chairman. 

Mr.  Trump.  Thank  you,  sir. 

Mr.  Richardson.  The  chair  recognizes  the  gentleman  from  Ha- 
waii. 

Mr.  Abercrombie.  Mr.  Trump,  you  said  you  don't  have  any  prob- 
lem with  competition. 

Mr.  Trump.  That  is  absolutely  correct,  sir. 

Mr.  Abercrombie.  There  have  been  suggestions  by  the  Internal 
Revenue  Service  and  other  governmental  agencies'  representatives 
this  morning  that,  with  some  modification  of  the  1988  gaming  laws, 
that  regulation — administrative  oversight  could  be  put  into  place. 
Now  do  I  understand  you  to  say  that  if  that  is  the  case,  then  you 
are  perfectly  willing  to  compete? 

Mr.  Trump.  I  can  get  other  representatives  of  the  Internal  Reve- 
nue, I  believe,  to  say  the  exact  opposite.  I  can  get  representatives 
of  the  FBI,  I  believe,  to  say  the  exact  opposite. 

Mr.  Abercrombie.  That  is  not  my  question. 

Mr.  Trump.  I  do  not  believe  that  you  can  correct  this  situation. 
I  do  not  believe 

Mr.  Abercrombie.  Why  do  you  not  believe  that? 

Mr.  Trump.  I  do  not  believe  that  by  just 

Mr.  Abercrombie.  Does  that  have  something  to  do  with  Indians? 


235 

Mr.  Trump.  No.  It  has  something  to  do  with  organized  crime. 

Mr.  Abercrombie.  Organized  crime  can  get  the  Indians  but  not 
to  you? 

Mr.  Trump.  No.  I  don't  beUeve  that  organized  crime  can  stay 
with  us  for  a  very  long  period;  they  will  be  caught.  I  do  not  believe 
they  can  be  caught  on  an  Indian  reservation.  I  am  not  saying  that 
we  can't  have  individual  transactions  go  wrong,  but  they  will  be 
caught.  We  have  every  check  and  balance.  I  am  talking  beyond  law 
enforcement.  We  have  every  check  and  balance. 

But  do  you  know  what  is  nice  about  us?  We  can  say,  "Hey,  the 
bad  guys  are  on  here;  call  the  FBI;  call  the  Casino  Control  Com- 
mission, call  the  sheriff,  call  the  U.S.  attorney."  The  Indians  can't 
do  that  to  the  same  extent.  They  don't  have  the  checks  and  bal- 
ances. 

Mr.  Abercrombie.  Why  are  the  Indians  incapable  of  doing  that? 

Mr.  Trump.  If  you  look  at  their  security  systems,  if  you  look  at 
what  they  have  installed  in  their  casinos 

Mr.  Abercrombie.  Try  answering  my  question. 

Mr.  Trump.  If  you  look — I  am  not  saying  anything 

Mr.  Abercrombie.  Try  answering  my  question. 

Mr.  Trump.  I  am  answering  your  question  very  nicely,  sir. 

Mr.  Abercrombie.  No,  you  are  not.  You  are  avoiding  answering 
the  question. 

Mr.  Trump.  I  mean  I  don't  think  you  want  to  hear  the  real  an- 
swer. That  is  the  problem.  If  you  look 

Mr.  Abercrombie.  The  real  answer  is,  you  don't  believe  that  if 
the  same  regulations  with  respect  to  the  IRS,  the  same  kind  of 
Banking  Security  Act,  the  same  kind  of  vigilance  is  put  forward  on 
Indian  reservations  and  with  respect  to  gambling  and  gaming 
where  Indian  tribes  are  concerned,  your  contention  is,  they  will  not 
be  able  to  exercise  the  same  vigilance  that  takes  place  in  Atlantic 
City  at  your  casinos  or  in  Nevada. 

Mr.  Trump.  My  contention  is  that  there  are  too  many  places,  and 
if  they  are  going  to  go  under  the  cry  of  sovereignty  where  they 
don't  have  the  same  powers — where  this  Government  doesn't  have 
the  same  police  powers  over  them,  I  say  that  there  is  absolutely  no 
way  that  you  are  going  to  keep  the  mob  out  of  the  Indian  reserva- 
tions, and  therefore 

Mr.  Abercrombie.  Let's  move  to  the  question  of  sovereignty. 

Mr.  Trump.  And  therefore  that  cannot  be  met. 

Mr.  Abercrombie.  Let's  move  to  the  question  of  sovereignty 
then.  You  indicate  that  they  don't  pay  taxes. 

Mr.  Trump.  I  didn't  indicate  they  don't  pay  taxes.  I  said  they  are 
not  paying  taxes  on  casinos,  and  they  are  not  paying  taxes  on 

Mr.  Abercrombie.  That  is  because  the  profits  from  it  are  to  go 
to  the  reservations. 

Mr.  Trump.  Oh  really?  What  about  the  $400  million  profit 

Mr.  Abercrombie.  Yes,  the  profits  by  law. 

Mr.  Trump.  What  about  the  $400  million  profit  that  they  get,  the 
300  Indians? 

Mr.  Abercrombie.  If  you  would — ^Mr.  Trump,  if  you  would  get 
less  rhetorical  and  more  back  to  the  facts,  I  think  we  could  get 
somewhere  with  this  testimony. 


236 

The  profits  go  back  to  the  reservation,  go  back  for  expenditures 
on  behalf  of  Indians.  Therefore,  a  logical  person — ^you  are  the  one 
who  has  brought  up  the  question  of,  it  stands  to  reason,  and  we 
have  to  use  common  sense — it  is  common  sense  that  it  is  in  the  in- 
terests of  Indian  tribes  to  see  that  the  games  are  run  honestly,  be- 
cause the  more  money  that  comes  into  the  tribe,  the  more  that  can 
be  spent  on  the  reservation  on  behalf  of  Indian  children,  on  behalf 
of  elderly  people,  the  same  people  that  you  have  expressed  an  in- 
terest in. 

Mr.  Trump.  Respectfully,  sir,  I  really  don't  believe  you  under- 
stand, and  if  you  do,  then  we  have  a  bigger  problem. 

What  we  have  is,  when  the  tough  guys,  the  bad  guys,  walk  on 
to  that  reservation,  I  really  don't  believe  that  an  Indian  leader  will 
be  able  to  tell  that  gentleman  to  get  the  hell  off. 

Mr.  Abercrombie.  Like  you  can, 

Mr.  Trump.  Like  I  can.  You  know  why?  Because  I  have  a  lot  of 
backup.  I  have  the  United  States  Government,  I  have  FBI,  I  have 
U.S.  attorneys,  I  have  all  of  these  people  as  my  backup.  They  don't 
have  the  backup.  They  want  to  be  sovereign. 

Mr.  Abercrombie.  Have  you  read  the  gaming  law? 

Mr.  Trump.  Yes,  I  have  read  the  gaming  law. 

Mr.  Abercrombie.  Then  you  know  perfectly  well  that  the  tribes 
have  at  their  ability  to  come  in,  the  Department  of  the  Interior,  the 
gaming  commissions,  the  States  themselves  under  the  compact  reg- 
ulations. What  you  are  sa3ang  is 

Mr.  Trump.  Have  thev  ever  done  it? 

Mr.  Abercrombie  [continuing].  Is  that  they  will  not  be  able 
to — they  certainly  won't  be  able  to  do  it  if  they  don't  get  the  co- 
operation of  the  States  or  of  the  Federal  Government,  and  what  we 
are  here  to  see  happens  is  that  Indian  tribes  that  have  had  their 
rights  violated  in  every  single  instance  with  every  single  treaty,  at 
least  as  far  as  this  Member  is  concerned  and  I  think  this  commit- 
tee is  concerned  and  Members  of  this  Congress  are  concerned,  is 
not  going  to  happen  again. 

If  you  want  competition,  and  you  say  you  do,  I  think  you  are 
going  to  be  able  to  get  it,  and  they  will  come  under  the  same  kind 
of  competition,  under  the  same  kind  of  regulations  and  vigilance  as 
you  are  calling  for. 

Mr.  Trump.  Sir,  I  think  you  are  kidding  yourself,  respectfully, 
and  I  would  just  like  to  add,  you  have  in  Connecticut  a  tribe  that 
is  going  to  make,  I  think,  $500  million  profit — profit — ^this  year.  I 
believe  that  tribe  has  300  members,  maybe  it  has  400,  but  it  has 
a  very  small  number  of  members. 

I  would  like  to  know,  when  you  say  they  go  back  and  they  give 
the  money  to  themselves  and  they  reinvest,  do  you  think  it  is  ap- 
propriate that  the  300  people  who  happen  to  have  lucked  out  in  a 
sense  by  having  a  reservation  between  Manhattan  and  Boston — do 
you  think  it  is  appropriate  that  that  money  be  spent  on  those  300 
people,  or  do  you  think  maybe,  now  maybe,  that  money  should  be 
spread  for  all  Indians  all  over  the  Nation,  many  of  which  don't 
have  the  luck  of  being  next  to  Boston  or  New  York  City? 

Mr.  Abercrombie.  It  is  probably  at  least  as  appropriate  as  all 
the  money  that  was  taken  in  all  the  leveraged  buyouts  and  the 
mergers  and  all  the  other  kind  of  activity  that  took  place 


237 

Mr.  Trump.  Right,  and  put  a  lot  of  people  to  work. 

Mr.  Abercrombie  [continuing].  Among  the  two  or  300  people  in 
New  York  City  over  the  last  decade  and  a  half. 

Mr.  Trump.  And  put  a  lot  of  people  to  work,  sir. 

Mr.  Abercrombie.  So  do  the  casinos. 

Mr.  TORRICELLI.  Mr.  Abercrombie,  may  I  respond  to  your  points? 

Mr.  Abercrombie.  Certainly. 

Mr.  Torricelli.  I  think  that  as  you  seek  answers  to  your  own 
questions. 

Mr.  Abercrombie.  I  beg  your  pardon?  I  am  sorry. 

Mr.  Torricelli.  As  you  seek  answers  in  your  mind  to  your  own 
questions,  I  think  there  are  several  things  you  should  keep  in 
mind. 

First,  we  have  the  reality  of  an  inspector  general's  report  which 
cites  not  the  theory  but  fact  that  Indians  themselves  are  being 
cheated  by  management  companies  and  sometimes  their  own  lead- 
ership to  the  tune  of  millions  of  dollars. 

Second,  the  principal  problem  of  keeping  organized  crime  off 
these  reservations  isn't  only  one  of  law  enforcement  agencies  find- 
ing them,  but  in  many  of  these  instances  it  isn't  even  against  the 
law.  There  is  nothing,  per  se,  against  the  law  for  an  Indian  tribe 
to  go  to  a  company  to  manage  its  casinos  which  has  organized 
crime  figures  in  it;  no  law  is  violated,  no  regulation. 

Third,  on  the  question  of  the  compacts,  your  point  would  be  well 
taken  on  the  question  of  the  State  compacts  if  everybody  had  a 
State  compact  and  those  State  compacts  all  provided  for  what  you 
cited.  A  third  of  the  reservations  have  no  compacts.  Many  of  the 
remainder,  as  in  the  State  of  New  York,  as  Mr.  Trump  cited, 
reached  compacts  under  the  pressure  of  Federal  courts,  they  did 
not  want  to  do  so,  and  all  of  them  do  not  provide  for  the  provisions 
that  you  cited. 

Therefore,  the  kind  of  agreements  that  you  would  hope  would  be 
in  place,  on  money  laundering,  on  background  checks  simply,  trag- 
ically, do  not  exist. 

Mr.  Abercrombie.  Thank  you,  Mr.  Torricelli.  I  think  that  is  the 
reason  that  we  are  holding  the  hesirings.  I  can  assure  you  that  this 
Member  is  paying  close  attention  to  what  you  are  suggesting,  is 
paying  close  attention  to  the  suggestions  from  the  IRS  and  the 
other  law  enforcement  individuals  that  have  appeared  before  us, 
and  as  far  as  I  am  concerned,  I  think  if  we  can  address  those  prob- 
lems, then  maybe  many  of  the  contentions  now  being  made  will  be 
taken  care  of. 

Finally,  let  me  say  for  the  record  that  I  think  that  while  the  pas- 
sion involved  in  this  discussion  to  this  point  is  understandable,  I 
think  it  is  a  disservice,  at  a  minimum,  to  the  Indian  tribes  which 
have  come  under  the  gaming  law  as  passed  in  1988  to  indicate  that 
they  would  be  any  less  interested  in  keeping  organized  crime  out, 
any  less  capable  of  making  that  kind  of  commitment,  and  that  it 
is  a  vestige  of  a  patronizing  attitude,  not  from  you,  Mr.  Torricelli, 
but  a  vestige  of  a  patronizing  attitude  on  the  part  of  the  general 
public  should  they  accept  Mr,  Trump's  contention  that  they  are  in- 
capable of  dealing  with  this  situation,  of  presumably  even  wanting 
to  deal  with  this  situation.  That  I  do  not  think  will  succeed  with 
this  committee,  and  as  far  as  that  is  concerned,  Mr.  Trump 


238 

Mr.  Trump.  I  never  said  that,  sir,  and  I  think  you  know  I  never 
said  that. 

Mr.  Abercrombie.  If  you  want  to  pursue  that  line  of  reasoning, 
if  you  want  to  pursue  that  line  of  argument  with  the  public,  I  can 
guarantee  you  that  it  is  not  going  to  succeed  in  this  Congress. 

Mr.  TORRICELLI.  I  don't  think,  Mr.  Abercrombie,  that  anybody  be- 
lieves the  Indian  tribes  do  not  want  to  keep  organized  crime  off  the 
reservations.  They  have  a  greater  incentive  to  keep  them  off  the 
reservations  than  any  of  us  have.  We  understand  that.  I  think  it 
is  Mr.  Trump's  testimony  that,  given  the  use  of  force  and  intimida- 
tion, it  is  very  difficult  that,  even  if  known,  but  largely  the  problem 
is  that  it  is  not  known. 

I  spoke  of  the  insidious  ways  that  organized  crime  tried  to  work 
its  way  into  Atlantic  City.  It  took  an  extraordinary  effort  to  expose 
it.  I  think  it  is  our  combined  belief  that  that  is  just  very  hard  to 
do  without  the  resources. 

Finally,  Mr.  Abercrombie,  I  want  to  note  to  you  that  in  what  I 
think  is  the  only  bill  before  the  committee  dealing  generally  with 
the  problem  of  corruption  in  Indian  gaming,  my  legislation  calls 
completely  for  equity.  I  do  not  eliminate  opportunities  for  Indians, 
only  put  all  citizens  on  the  same  basis  with  the  same  regulatory 
responsibilities  and  rights,  no  special  advantages,  but  certainly  no 
discrimination.  I  would  not  be  a  part  of  discrimination  against  any- 
one, and  I  would  invite  you  to  review  my  legislation.  I  think  you 
will  see  it  is  fair  from  that  perspective. 

Mr.  Abercrombie.  As  I  indicated,  in  conclusion,  Mr.  Chairman 
and  Mr.  Torricelli,  I  am  paying  close  attention  to  your  legislation 
and  will  fully  take  it  into  account,  I  can  assure  you. 

Mr.  Torricelli.  Thank  you. 

Mr.  Richardson.  The  chair  recognizes  the  Minority  Member 
from  California,  and  I  would  ask  that  the  gentleman  from  Hawaii 
chair  briefly. 

Mr.  Calvert.  Thank  you,  Mr.  Chairman. 

Mr.  Torricelli,  as  you  know,  I  am  from  California.  We  are  near 
another  gambling  area  that  is  even  larger  than  Atlantic  City,  Las 
Vegas.  There  are  lots  of  people  who  would  like  to  own  a  casino  in 
Southern  California.  I  believe  50  cents  out  of  every  gambling  dollar 
that  goes  to  Las  Vegas,  I  have  been  told,  come  out  of  Southern 
California  or  California.  So  there  is  a  lot  of  pressure  in  California 
to  put  Class  3  gaming.  At  the  present  time  in  California  we  only 
have  Class  1  and  Class  2  gaming. 

As  I  understand  it,  the  National  Indian  Gaming  Commission  can 
only  regulate  Class  2  gaming  in  California,  yet  in  San  Diego  we 
have  reservations  involved  in  what  anyone  would  define  as  Class 
3  gaming. 

I  also  understand  that  no  regulation  of  any  kind  is  taking  place 
on  the  revenue  that  is  being  generated  out  of  that  Class  3  gaming. 
The  sourcing  for  the  slot  machines,  the  revenue  that  is  generated 
from  those  machine,  it  is  not  under  the  purview  of  the  National  In- 
dian Gaming  Commission  to  regulate  Class  3  gaming  because  Class 
3  gaming  is  not  allowed  in  California.  So  we  have  a  significant 
problem. 

In  California  also,  near  my  district,  in  Palm  Springs,  the 
Caliente  Indians  have  entered  into  an  agreement  with  Caesar's 


239 

would  to  build  an  80,000-square-foot  casino  in  downtown  Palm 
Springs.  There  are  other  major  casino  operators  who  are  now  ac- 
tively looking  around  Southern  California  to  get  involved  in  casinos 
in  Southern  California  believing  that  they  can  get  into  Class  3 
gaming. 

I  am  hopeful,  because  I  have  talked  to  the  district  attorney,  and 
I  know  our  chairman  has,  and  to  the  governor  of  the  State  of  Cali- 
fornia, who  is  very  concerned  about  Class  3  gaming  coming  to  Cali- 
fornia, and  we  want  to  stop  that,  and  that  is  one  of  the  reasons 
that  I  am  supportive  of  your  legislation. 

But  do  you  have  any  comment  on  that?  Why  isn't  the  Federal 
Government,  the  FBI,  the  Justice  Department,  stopping  Class  3 
gaming  in  California  if,  in  fact,  it  is  not  allowed? 

Mr.  TORRICELLI.  I  think  largely,  Mr.  Calvert,  in  defense  of  the 
FBI,  they  haven't  been  given  the  mandate  or  even  the  authority. 

It  was  never  the  intention  of  this  Congress,  in  my  judgment,  it 
certainly  was  not  the  intention  of  this  Member,  in  an  attempt  in 
the  Indian  Gaming  Act  to  restore  equity  to  Native  Americans,  to 
allow  them  to  have  the  special  advantage  of  operated  casinos  out- 
side the  purview  of  the  law,  but  indeed  that  is  largely  what  has 
happened. 

This  is  something  almost  unique  in  American  economic  history. 
We  created  an  industry  which  now  we  must  return  to  regulate, 
rather  than  at  its  inception  devising  a  regulatory  scheme.  Whether 
or  not  we  can  do  it,  I  do  not  know,  but  it  is  largely,  I  think,  out 
of  control. 

Mr.  Calvert.  The  big  guest  problem  in  Csdifomia,  I  think,  we 
have  94-plus  Federally-recognized  tribes  in  the  State  of  California, 
more  than  any  other  State  in  the  Nation  by  a  wide,  wide  margin. 

I  have  listened  to  the  testimony  on  enforcement.  If,  in  fact.  Class 
3  gaming  to  California,  which  some  argue  may  happen,  how  are  we 
going  to  regulate  Class  3  gaming  in  the  State  of  California  with  94 
Federally-recognized  tribes  spread  throughout  the  State  of  Califor- 
nia from  urban  areas  to  rursd  areas,  with  the  limited  manpower  of 
law  enforcement  that  we  have  today? 

We  have  a  crime  bill  that  is  up;  we  are  arguing  over  dollars  to 
fund  that.  How  are  we  going  to  fund  regulating  94  Federally-recog- 
nized tribes?  And,  in  fact,  could  that  even  occur? 

Mr.  TORRICELLI.  Mr.  Calvert,  the  fact  is,  you  are  not.  The  re- 
sources would  be  so  vast,  the  manpower  so  enormous,  it  probably 
is  not  possible.  I  think  that  is  part  of  the  testimony  that  was  pre- 
viously given.  In  Atlantic  City  and  Las  Vegas,  we  had  the  advan- 
tage of  defined  geographic  areas  and  a  limited  number  of  partici- 
pants. 

We  are  now,  today,  discussing  125  Indian  gaming  establish- 
ments. We  could  well  in  the  next  century  have  a  thousand,  based 
on  the  number  of  tribes  and  the  applications.  The  kind  of  control 
we  have  seen  in  the  past  simply  will  not  exist  in  the  future. 

Mr.  Calvert.  Thank  you,  Mr.  Chairman. 

Mr.  Abercrombie  [presiding].  Mr.  Miller. 

Mr.  Miller.  Thank  you,  Mr.  Chairman. 

In  my  19  years  on  this  committee,  I  don't  know  when  I  have 
heard  more  irresponsible  testimony  than  I  just  heard  from  this 
panel.  You  have  cast  upon  the  Indian  nations  of  this  country  a 


240 

blanket  indictment  that  organized  crime  is  rampant  on  their  res- 
ervations. You  have  suggested  that  the  corollary  to  that  is  that 
where  there  are  compacts  somehow  State  governments  are  party  to 
that  without  their  knowledge,  in  spite  of  the  FBI  testimony  that 
this  is  not  a  significant  problem. 

Mr.  Trump,  in  one  sentence  you  say,  "They  are  the  most  capable 
of  agencies,"  and  that  you  are  not  a  law  enforcement  expert,  and 
then  you  tell  us  that  you  have  superior  knowledge  to  their  knowl- 
edge about  the  extent  of  organized  crime  on  Indian  reservations. 

I  just  find  it  incredible.  This  hearing  is  held  for  the  purposes  of 
recognizing  that  Indian  gaming  does  present  an  opportunity  to  or- 
ganized crime,  to  members  of  the  tribe  who  have  larceny  in  their 
heart,  and  to  people  who  do  business  with  them  who  want  to  take 
advantage  of  them  however,  and  everybody  recognizes  that. 

So  to  come  here  and  to  suggest  that  you  have  some  additional 
knowledge  of  the  extent  of  organized  crime  beyond  what  the  FBI, 
the  IRS,  the  Treasury,  and  others  have  suggested,  and  then  to  sug- 
gest the  reason  you  have  that  is  because  you  know  this — ^you  don't 
know  this;  you  suspect  this  perhaps,  you  don't  know  this,  because 
it  is  just — ^you  know,  it  is  just  not  there;  it  is  just  not  there. 

The  list  of  cases  that  you  hold  up,  a  substantial  portion,  because 
I  can't  tell  because  they  come  from  newspaper  reports,  are  previous 
to  this  law  when  many  of  these  activities  were  illegal  in  and  of 
themselves,  they  were  being  challenged  in  court — 1985,  1984,  1981. 

You  tell  us  that  somebody  had  somebody  run  their  gaming  oper- 
ation on  the  Barona  Rancheria  but  he  couldn't  get  a  license  from 
the  Nevada  Gaming.  We  don't  know  why.  We  don't  know  why  he 
was  disqualified  in  Nevada  or  whether  that  is  grounds  for  disquali- 
fication. It  may  be.  I  am  not  presenting  the  evidence,  you  are  pre- 
senting the  evidence. 

But  you  are  suggesting  that  each  an  every  one  of  these  cases  in- 
dicate organized  crime,  that  they  indicate  a  lack  of  sophistication. 
In  fact,  many  of  these  cases  were  brought  because  the  Indian  tribes 
themselves  went  to  law  enforcement  agencies.  They  discovered  they 
were  being  duped,  you  know,  and  to  equate  them — to  equate  them 
now  with  an  industry  in  New  Jersey  or  Nevada,  you  know,  to  the 
tune  of  hundreds  of  millions  of  dollars  in  the  month — what  did  you 
take  in  September,  $200  and  some  million  in  New  Jersey?  We  are 
all  aware  of  this. 

Mr.  Trump,  you  are  quite  wrong.  They  have  every  right  to  go  to 
the  FBI,  the  U.S.  attorney,  the  Treasury  Department.  We  have 
Federal  trust  relationships  which  give  them  direct  access. 

Mr.  Trump.  They  didn't  in  these  cases,  sir. 

Mr.  Miller.  You  don't  know  that. 

Mr.  Trump.  Well,  they  are  cases,  they  are  convictions.  You  can 
go  and  get  the  case  number. 

Mr.  Miller.  The  Rincon  case  was  brought  by  the  tribe,  one  fac- 
tion of  the  tribe  that  said,  "We  are  being  ripped  off  by  another  fac- 
tion of  the  tribe,  and  they  are  trying  to  get  organized  crime  in 
here."  They  went. 

Mr.  Trump.  We  have  got  many  cases.  Sir,  we  have  got  many 
cases  in  here.  I  don't  think  you  have  seen  them. 

Mr.  Miller.  I  am  sure  you  do.  There  are  many  cases  in  your  in- 
dustry where  you  didn't  go,  law  enforcement  came  through  the  door 


241 

before  you  went  through  their  door.  But  are  we  going  to  have  a 
blanket  indictment  of  all  casino  owners?  As  a  politician,  you  know, 
I  am  kind  of  sensitive  to  the  word  "all," 

Mr.  Trump.  I  certainly  never  said  that,  and  I  certainly  don't  ap- 
preciate the  fact  that  you  are  putting  words  in  my  mouth  because 
it  is  incorrect,  and  I  have  great  respect  for  the  Indians,  and  if  I 
were — and  if  I  were  running  a  reservation  and  was  under  the  aus- 
pices of  this  ridiculous  Act  that  was  passed,  I  would  have  the  same 
difficulty  as  the  Indians  keeping  organized  crime  out,  I,  me.  So  that 
is  not  a  blanket 

Mr.  Miller.  When  you  don't  know — ^you  don't  know. 

Mr.  Trump.  Excuse  me,  sir.  That  is  not  a  blanket  indictment  of 
anybody. 

Mr.  Miller.  You  don't  know  that  they  are  having  a  difficulty. 

Mr.  Trump.  Well,  you  can't  know  when  you  have  no  FBI  agents 
assigned  to  the  Indian  reservations,  sir. 

Mr.  Miller,  You  don't  have  any  FBI  agents  assigned  to  you. 

Mr.  Trump.  Oh  really?  How  many  FBI  agents  are  in  Las  Vegas 
right  now?  How  many  FBI  agents  are  assigned  to  Atlantic  City? 
Why  didn't  you  ask  that  question? 

Mr.  Miller.  Why  are  they  there,  Mr.  Trump?  They  are  there  be- 
cause they  think  there  is  organized  crime, 

Mr.  Trump.  They  are  there  to  stop  crime.  So  why  aren't  they 
there  with  respect  to  the  Indian  reservations? 

Mr.  Miller.  Because  they  believe  that  your  industry  is  attractive 
to  organized  crime. 

Mr.  Trump.  Look,  you  have  got  a  totally  closed  mind  on  the  sub- 
ject, sir. 

Mr.  Miller,  No,  no,  no,  I  don't,  Mr,  Trump. 

Mr.  Trump.  We  could  walk  in  here  with  the  greatest  proof  in  the 
history  of  the  world,  and  frankly,  your  mind  is  so  closed,  for  what- 
ever reason,  that  I  can't  believe  it. 

Mr.  Miller.  But  you  don't  have  them?  You  don't  have  them? 

Mr.  Trump.  If  you  really  want  to  study  this,  when  you  tell  me 
that  there  are  no  FBI  agents  assigned  to  the  Indian  reservations 
and  yet  you  have  tremendous  numbers  in  Las  Vegas  and  Atlantic 
City — tremendous  numbers,  in  fact,  two  of  their  largest  places — I 
want  to  tell  you  something,  you  have  a  long  way  to  go,  and,  for 
whatever  reason,  you  have  a  closed  mind,  I  don't  know  why.  Per- 
haps you  could  tell  me. 

Mr.  Miller.  No,  Mr.  Trump.  I  have  a  closed  mind  aga'nst  evi- 
dence that  is  not  substantiated.  I  have  a  closed  mind  against  state- 
ments that  are  made  about  other  people  in  generalities. 

Mr.  Trump.  You  are  going  to  be  very  embarrassed  in  two  years, 
sir. 

Mr.  Miller.  I  have  a  closed  mind  if  you  go  on  a  radio  show  and 
you  say,  "Now  some  drunken  Indians  want  to  come  down  here  an 
open  a  reservation." 

Mr.  Trump.  I  didn't  say  that,  sir.  Quote  it,  I  didn't  say  that.  Who 
said  that?  Who  said  that?  I  would  like  an  apology  right  now,  be- 
cause I  didn't  say  that, 

Mr,  Miller,  Imus  opened  the  broadcast — excuse  me,  Mr,  Imus 
said  that, 

Mr,  Trump,  Okay,  Could  I  please  have  an  apology? 


242 

Mr.  Miller.  You  can  have  an  apology. 

Mr.  Trump.  Thank  you,  sir. 

Mr.  Miller.  Is  this  you  discussing  Indian  blood:  "We  are  going 
to  judge  people  by  whether  they  have  Indian  blood,"  whether  they 
are  qualified  to  run  a  gaming  casino  or  not? 

Mr.  Trump.  That  probably  is  me,  absolutely,  because  I'll  tell  you 
what,  if  you  look — if  you  look  at  some  of  the  reservations  that  you 
have  approved — you,  sir,  in  your  great  wisdom,  have  approved — I 
will  tell  you  right  now,  they  don't  look  like  Indians  to  me,  and  they 
don't  look  like  Indians.  Now  maybe  we  say  politically  correct  or  not 
politically  correct.  They  don't  look  like  Indians  to  me,  and  they 
don't  look  like  Indians  to  Indians,  and  a  lot  of  people  are  laughing 
at  it,  and  you  are  telling  how  tough  it  is,  how  rough  it  is,  to  get 
approved.  Well,  you  go  up  to  Connecticut,  and  you  look.  Now,  they 
don't  look  like  Indians  to  me,  sir. 

Mr.  Miller.  Thank  Grod  that  is  not  the  test  of  whether  or  not 
people  have  rights  in  this  country  or  not,  whether  or  not  they  pass 
your  look  test. 

Mr.  Trump.  Yes.  It  depends  whether  or  not  you  are  approving  it, 
sir. 

Mr.  Miller.  No,  no,  it  is  not  a  question  of  whether  I  am  approv- 
ing it.  It  is  not  a  question  of  whether  I  am  approving  it. 

Mr.  Trump,  do  you  know  in  the  history  of  this  country  where  we 
have  heard  this  discussion  before:  "They  don't  look  Jewish  to  me." 

Mr.  Trump.  Oh  really? 

Mr.  Miller.  "They  don't  look  Indian  to  me."  "They  don't  look 
Italian  to  me."  And  that  was  the  test  for  whether  people  could  go 
into  business  or  not  go  into  business,  whether  they  could  get  a 
bank  loan:  You  are  too  black;  you  are  not  black  enough. 

[Transcript  of  Imus  broadcast  follows:] 


243 


JtADlC 
TVREPORTS 


imifir-""""'"'^-'"^''-'^  C!;:;:r:r>t^i: 

1KAM3CMPT  mm  rix&3S^3iS3 

5T«»0H       WPAN-AM 

pftOOtAM  jj^g    jjj   ,j.jjg   MORHING  °"'  NBW   YORK 

OAlE  06/18/93  08:30AM         ,„;o«« 

DONALD  TRDMP 
SUBJECT 

BROADCAST  EXCERPT 

DON  IMDS:   It's  8:30  exactly  here  at  WPAK  in  New 

York,  and  here  with  us  now,  Donald  Truc^.  Good  moraing,  Donald. 

DONALD  TROHP:   How  you  doing,  Don? 

IMUS:   I'm  fiaa.   How  are  you? 

TROMP:   I'm  very  oood.  ThanJca. 

IMUS:  So  what  is  this  now?  A  bunch  of  these 
drunken  Injuns  want  to  open  a  casino  down  there  in  New  Jersey? 

TROMP:  Well,  it'3  a  battle  that  we're  fighting  and 
I  think  it'3  being  suceeBsfully  fought.  A  lot  of  the  reservations 
are  being,  in  some  people's  opinion,  at  least  to  a  certain  extent 
run  by  organized  crime  and  organized  crime  elements,  as  you  can 
imagine.  There's  no  protection.  There's  no'  smythij^.  And  it's 
become  a  joke.  It's  become  a  laughing  joke.  And  the  politicians 
around  1987  passed  a  law  where  the  Indians  can  have  virt\jally 
unsupervised  casino  gaming.  So  we're  in  there  fitting  it 
and  I  think  we're  maOcing  a  lot  of  progress.  I  think  you'll  see 
some  very  major  things  happenictg  over  the  next  couple  of  months. 

IMOS:  In  yoMT  mind,  is  there  any  legitimacy  in  them 
being  allowed  to  have  casinos  in  states  where  there  aren't  now 
casino,  like  say  Connecticut? 

TRXJMPs  I  think  it'e  up  to  chcstates.  I  mean,  one 
of  Che  things  we  did  is  bring  a  lawsuit  and  say  it's  scates' 
rights.  As  an  example.  Governor  Cuoao  in  New  York  didn't  want  to 
have  the  Indians  having  casinos.  The  churches  didn't  want  it.  It 
knocks  out  the  bingo.  It  knocks  out  the  charities,  it  knocks  out 
a  lot  of  other  things.  So  what  they  did  ia  they  filed  suits  aid 
they  filed  everything  else.  Oltiwately,  the  Governor  of  New  York 
was  forced  to  pass  this  horrendous  situation  that's  taking  place  ia 
upstate  New  York.   I  think  it's  going  to  be  r-Vi^nged  and  I  think 


244 

-  2  - 

it's  going  to  be  changed  fairly  quickly,  Don, 

I>fOS:   So  will  Indians  be  allowed  co  open  casinos 
here  in  New  York? 


I  think  it's  going  to  be  unlikely  within  the 


next  year. 


IMDS:  Okay.  This  is  just  niy  opinion,  but  I  don't 
think  it  makes  sense  to  anybody  to  have  Indians  operate  casinos  in 
New  Jersey. 

TRt3MP:  General  George  Custer  was  against  it  also 
and  looked  what  happened  to  him. 

IMUS:   But  in  New  Jersey  --  obviously  you  have  three 
casinos  --  you  already  have  casinos. 

TRDMP;  Right,  but  the  difference  is  I  pay  taxes. 
The  Indiems  aren't  paying  any  tajces.  The  Indians  aren't  putting 
anything  back  into  what's  happening.  The  funny  thing  is  Caomo  was 
forced  to  put  --  and  now  ail  of  a  sudden  they  send  hire  certified 
letters,  "We  want  bridges." 

They  call  it  the  sovereign  nation.  They  call  it  a  nation/ 
this  great  sovereign  nation,  the  Indian  tribes.  All  of  a  sudden, 
it's  nations. 

Before  it  wasn't  a  nation,  before  gajak?ling.  Now  it's  this 
greac  sovereign  nation.  We  protect,  we  do  this,  we  do  that,  but 
when  it  comes  to  gambling,  it's  a  sovereign  r^aticn. 

So  it's  really  a  double  standard  and  no  taxes  are  paid.  No 
supervision's  there,  tremendous  crime,  and  most  of  the  Indiana 
don't  want  it  themselves.  The  leaders  --  you  know,  all  chiefs  and 
no  Indians,  and  the  leaders  want  it  for  the  qbvious  reason,  but  I 
think  it's  something  that's  going  to  end  or  is  certainly  going  to 
be  supervised  very,  very  stringently. 

IMOS:  Would  there  be  any  reason,  if  push  comes  to 
shove,  for  you  to  become  a  meinfaer  of  these  tribes? 

TRDMP;  Hell,  I  think  if  we  Ipst  various  things,  I 
'yculd  perhaps  become  an  Indian  myself. 

IMOS:  Tou  know,  do  one  of  thqse  Robert  Bly  deals. 

TRUMP:  Well,  I  think  I  might  h^ve  more  Indian  blood 
than  a  lot  of  the  so-called  Indiana  that  are  trying  to  open  up  the 
reservations. 

I  looked  at  one  of  them  --  well,  I  won't  go  into  the  whole 


245 


-  3 


story,  but  I  can  tell  you,  I  said  to  him,  fj  thirJc  I  have  more 
Indian  blood  in  me  thsin  you  have  in  you."  And  he  laughed  at  rae  and 
he  sort  of  acknowledged  that  I  was  right,  but  it's  a  joke.  It' a 
really  a  joke. 

INUS:  A  couple  of  these  Indiams  up  in  Concectioit 
look,  like  Michael  Jordan,  frankly. 

TRUWP:  I  think  if  you've  eve¥  been  up  there,  you 
would  truly  say  that  these  are  not  Indiana.  One  of  thera  was 
telling  me  his  name  is  Chief  Running  Water • Sitting  Bull,  and  I 
said,  "That's  a  long  nauie."  He  said,  "Well,  just  call  me  Ricky 
Sanders."   So  this  is  one  of  the  Indians. 

I'll  tell  you,  they  got  duped  in  Washington  and  it's  jixst  one 
of  those  thingc  that  we  have  to  straighten  out.  It's  the 
neverending  problem  of  -- 

IMOS:     having  to  straightep  things  out. 

TRtMP:  One  of  the  big  things  that  I'm  working  on  is 
sports  betting  in  New  Jersey  and  we  have  a  sian  over  there  nained 
Chuck  Hytian  who  turns  out  to  be  a  disaster  for  the  people  of  New 
Jersey  because  this  would  mean  treroendoxis  taj^es  and  tax  revenues. 
1  don't  know  what  happened  with  the  bookies  or  whoever.  I  don't 
know  who  spoke  to  Hytian.  I  have  no  idea,  buthe's  single-hamdedly 
--  he's  a  Speaker  and  he's  got  some  power  over  there,  at  least  now, 
and  he's  single-handedly  stopping  sports  betting,  and  everybody  in 
New  Jersey  wants  it  and  it's  disgraceful  and  it's  a  great 
opportunity  for  Atlajitic  City.  It's  a  greaf  opportunity  for  New 
Jersey. 

And  the  senior  citizens  and  New  Jersey  will  get  tremendous  tax 
revenues  from  it.  So  for  all  of  you  folks  that  know  Speaker  Chuck 
Hytiem,  call  him  up  and  blast  the  hell  out  of  hira. 

IMTJS:  Kell,  our  opposition  on' sports  betting  is  as 
long  as  the  players  get  to  bet,  they  might  as  well  let  the  fans, 
you  know? 

TROMP:  Well,  the  players  bet;.  That's  abcolutftly 
true.  And  I'm  sure  it'll  probably  increase  the  ratings  of  your 
particular  station  quite  a  bit  if  they  had  sports  betting  in  New 
Jersey. 

IMOS:  It's  not  that  I  want  tq  be  like  Mike.  It's 
I  want  to  bet  like  Mike. 

TRUMP:  Yeah,  right.  Maybe  ypu  don't  want  to  bet 
like  Mike. 


246 


IM0S:  Maybe  I  can  win  once  in  a  while.  What  else 
is  new  with  you? 

TRDMP:  Nothing.  Things  are  going  great.  We're 
just  in  the  process  of  doing  eooe  incredible  things.  Tniatp  Plaza's 
doing  something  great  and  the  hotels  in  Atlantic  City  have  done 
record-  setting  business.  The  Taj  Mahal,  when  they  thought  Trump 
wae  finishftd,  "Trump  is  over.  He's  history,"  and  everything,  I  was 
opening  up  the  Taj  Mahal  and  they  said  it  could  never  do  the  kind 
of  numbers  projected,  and  it's  doing  substantially  greater  than 
anything  ever  projected.  So  it's  really  become  the  success  of 
the  industry. 

IMUS:  You  sound  like  a  Truap  P.R.  guy,  but  you 
netted  14  million  dollare  or  sowething  last  month. 

TREMP:  We  made  a  grosa  operating  profit  of  14 
million  dollars,  which  was  twice  what  the  projections  were  at  their 
highest,  and  they  won  41  million  dollars  last  month  at  the  Taj 
Mahal.  And  the  other  casinos  are  doing  proportionately  --  they're 
much  smaller,  but  proportionately  equally  as  well. 

IMtrSi  what's  the  status  with-  your  marriage?  Are 
you  still  getting  married? 

TRUMP:  Oh,  I ' m  doing  great .  If  s  really  fantastic. 

IMUS:  Yeah,  but  are  you  getting  married? 

TROMP:  That  might  be  the  oost  difficult  question 
you've  asked  me  so  far.  See,  the  Indian  problem  is  a  much  sic:5>ler 
problem.  That  can  be  solved. 

IMUS:  Maybe  you  can  have  one  of  those  traditional 
tribal  ceremonies. 

TRDMP;  That's  right.  Maybe  that  would  be  the  best 
way  to  do  it.  That  way,  it  wouldn't  be  an  authorized  marriage. 
Therefore,  I  could  claim  marriage  without  any  of  the  liabilities, 
right? 

IMOS:  That's  what  I  was  going  to  say. 

TRUMP:   "What  are  you  tailkiag'  about?   I  ne-.-wr  got 


Tcarried. ' 
about  it . " 


IMUS:  "I  gave  her  some  beads  a|id  that  was  basically 


TRUMP:  "I  can  get  s\ied  for  nine  billion  dollars,  but 
what  do  you  mean?  The  marriage  is  forget  it.  I  have  a  great 
relationship. 


247 


IMtTS:  It's   a  work,   in  progress. 

TRUMP :  Huh? 

IMOS:  It's  a  work  in  progress. 

TRUMP:  It's  a  work  of  art  in  progress. 

IMOS:  That's  right,  a  work  of  arc  in  progress. 

TROMP;  That's  exactly  correct,   how  are  you  doing 

on  your  social  front?  Vo  you  have  a  new  beaut:iful  girlfriend  yet? 

iMaS:  Well,  you  toow,  they  come  and  they  go. 

TRT3MPr  At  least  with  you,  I  laaovr  it's  definitely  a 
girlfriend,  okay? 

IMUS:  At  this  point,  yeah. 

TRDMP:  With  a  lot  Of  people,  we  don't  ]ctiow. 

IMOS:  Donald,  always  nice  to  talk  with  you.  Good 
luck  and  many  moon  coma  CSaoctaw. 

TRUMP:  Thank  you  very  much.  Bye. 

IMOS:  It's  8:36,  24  till  9:00/  Imus  in  the  Morning. 


roTou  p. 06 


248 


Torricelli  gambling  bill 
a  prize-winning  insult 


ith  Father's  Day  almost 
upon  m,  the  judges  are 
taking  nominations  for 
Father  of  the  Year. 
Benevolent  Great  Whit*  Father 
of  the  Year,  that  ia. 

I  euggest  Rep.  Robert 
TorricellL 

The  Englewood  Democrat  on 
Wednesday  introduced  a  bill 
aimed  at  (rlvirg  elates  more 
power  to  limit  gambling 
operations  run  by  American 
Indian  tribes.  It  was  immediately 
denounced  by  the  head 
of  the  National  Indian 
Gaming  Association  as 
"economic  racism." 

But  racism, 
economic  or  otherwise, 
by  itself  is  not  enough 
to  get  you  the 
BGWFOTY  Award.  For 
that,  you  must  include 
patronizing  and 
paternalistic 
justifications.  You  have 
to  literally  add  insult  to 
injury. 

And  BO,  beyond  worrying  about 
competition  for  Atlantic  City 
and  being  concerned  about 
organized  crime  (non-benevolent 
white  fathers)  using  the  tribal 
casinos  as  money-laundering 
fronU,  Great  White  Father- 
nominee  Bob,  end  the  Nevadans 
sponsoring  the  Senate  version  of 
the  bill,  are  motivated  by 
concern  for  the  Indian  people 
themselves. 

"Casino  gambling  is  the 
cultural  genocide  of  Native  •    ' 
Americans,"  Torricelli  said  in 
announcing  the  bilL  'This. will  • 
destroy  what  remains  of  the 
Native  American  culture." 

On  what  authority  does  he  say 
this?  I  asked  Torricelli  on 
Friday. 

"We  are  repeating  what  we  are 
getting  from  Indiana  themselves" 

—  Indians  who  work  ir. 
reservation  schools  and  health- 
care clinics  —  he  responded. 

The  reser.ations  were 
established  by  the  U.S. 
government  to  preserve  the     , . 
Indianfwaiy  of  ^ei  Torricelli  Said,  V 
not  "to  become  islands  of  casino' ' 
gtmbUiig  free  of  iaXE«  or';"-j'    ■ -: 
government  regulation  6t.l«w  ■  ; 
enforcement"  .         'r;^^ 

"This  isn't  an  answer  for  the 
economic  problems  of  the 
Indians,"  he  told  me. 

Does  anytjne  second  the 
nomination? 

"It's  the  back-door  approach 

—  you  know,  killing  with 


Chief  Ronald  "Red  Bone"  Van 
Dunk.  The  chief  is  trying  to 
steer  clear  of  the  gambling 
question  as  his  tribe,  whose 
members  live  In  North  Jersey 
and  southern  New  York,  pursues 
its  quest  for  federal  recognition. 
But  he  was  so  moved  by  the 
congressman's  concern  for  his 
people  and  their  culture  that  he 
had  tc  rtspond. 

"Ihe/re  going  to  help  the 
poor  Indians  —  by  not 
letting  them  do 
anything  to  enhance 
their  livelihoods,"  the 
chief  said.  "Like  they 
helped  them  out  there 
in  Arizona,  when  they 
found  gold.  Helped 
them  right  off  the 
land." 

"That  is  probably 
one  of  the  most 
ridiculous  things  I've 
ever  heard,"  says  Tim 
Giago,  an  Oglala  Sioux 
who  is  publisher  of  Indian 
Country  Today,  a  national 
newspaper  baied  in  Rapid  City, 
S.D.,  near  the  Pine  Rioge 
reservation,  where  tribal 
business,  worship,  and  the  like 
are  conducted  in  the  native 
language  and  where  the  culture  is 
holding  its  own  despite  centuries 
of  help  from  Greats  White 
Fathers. 

"Just  the  opposite  is  true," 
Giago  says.  "Where  does  the 
money  from  tribal  casinos  go?  It 
goes  into  scholarships  for  our 
students,  retirement  funds  for 
OUT  elderly  people.  It  goes  into 
buying  back  the  land,  to  support 
the  Indian  colleges  —  which  is 
where  the  language  and  the 
culture  is  tau^U" 


0  make  Indian- run  gaming 
subject  to  the  control  of 
individual  governors, 
Giago  says,  is  lik»  "putting 
the  fox  in  charge  of  the 
henhouse." '■.■9;i^;''.  ■    '-^  ■■■•,■ 

t  i'-"''        ■  ••  ■,      .  ^ 

^. ,   Who's  right  about  tribal  .■■ 
I'  casinos?  Seems  like  that  should 
'.  be  up  iOj  the  .tribal  councils  to 
decide. 

Anyway,  back  to  the)  ' 
nomination.  TorricelK's 
statement,  Giago  says,  "is  very 
paternalistic." 

■  Exactly  what  the  BGWFOTY 
iuHc^s  (.re  Wilcinc  for. 


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250 

Mr.  Trump.  I  want  to  find  out — well,  then,  why  are  you  approv- 
ing— ^you  are  approving  for  Indian.  Why  don't  you  approve  it  for  ev- 
erybody then,  sir?  If  your  case  is  nondiscriminatory,  why  don't  you 
approve  for  everybody?  You  are  saying  only  Indians — wait  a 
minute,  sir.  You  are  sajdng  only  Indians  can  have  the  reservations, 
only  Indians  can  have  the  gaming.  So  why  aren't  you  approving  it 
for  everybody?  Why  are  you  being  discriminatory?  Why  is  it  that 
the  Indians  don't  pay  tax  but  everybody  else  does?  I  do.  Why  is  it 
that  I  pay  tax?  Why  is  it  that  senior  citizens  get  tremendous  bene- 
fits from  the  taxes  that  a  certain  industry  does  but  the  Indians 
aren't  contributing  to  that?  Why  aren't  the  Indians — excuse  me,  sir. 
Why  aren't  the  Indians  that  are  making  all  the  money  in  Connecti- 
cut, which  is  the  most  successful  of  the  Indian  reservations — why 
aren't  they  spreading  the  wealth  with  the  other  Indians,  sir?  Why 
don't  you  do  something  for  the  other  Indians  that  are  living  in  total 
poverty?  Because — ^you  know  why?  Because  their  reservation  is  too 
far  away 

Mr.  Abercrombie.  Mr,  Trump,  if  you  will  give  the  chairman  a 
chance  to  2inswer  your  questions,  I  am  sure  he  will. 

Mr.  Trump.  I  am  sure  he  will,  absolutely. 

Mr.  Abercrombie.  Well,  don't  ask  the  questions  if  you  don't 
want  an  answer. 

Mr.  Trump.  I  think  I  know  the  answer  from  him. 

Mr.  Miller.  Well,  no,  no.  Let's  go  through  it. 

Mr.  Trump.  Why  don't  they  spread  the  wealth?  That  is  the  ques- 
tion. 

Mr.  Miller.  Mr.  Trump 

Mr.  Trump.  Why  don't  they  spread  the  wealth? 

Mr.  Miller.  Mr.  Trump — ^Mr.  Trump,  it  is  my  time. 

Mr.  Abercrombie.  Mr.  Trump,  the  chairman  has  the  time  now. 

Mr.  Miller.  Mr.  Trump,  why  don't  the  Indians  spread  the 
wealth  to  the  other  Indian  nations  that  don't  have  gambling  when 
they  don't  have  a  responsibility  to?  You  cite  that  one  of  the  great 
benefits  is  that  New  Jersey  senior  citizens  can  get  prescription 
drugs  at  $5.  What  about  the  Pennsylvania  senior  citizens  that 
leave  their  money  in  New  Jersey?  What  about  the  Washington, 
D.C.,  senior  citizens  that  leave  their  money  in  New  Jersey,  the  peo- 
ple from  New  York  and  Connecticut,  the  people  you  are  there  to 
attract?  What  about  all  of  our  constituents  from  California  that  go 
to  Nevada  and  leave  their  money  there?  Why  don't  they  get  $5  pre- 
scriptions? 

Because  you  don't  have  a  legal  obligation  to  do  so.  You  did  so  be- 
cause you  wanted  gaming  to  come  to  New  Jersey.  This  was  a  nego- 
tiated agreement.  The  Connecticut  agreement  is  a  negotiated 
agreement  between  the  State  of  Connecticut  and  the  tribe  in  Con- 
necticut. 

Mr.  Trump.  Hardly  negotiated,  sir.  It  was  really  forced  down  peo- 
ple's throats,  wouldn't  you  say? 

Mr.  Miller.  Okay,  now,  let's 

Mr.  Trump.  Do  you  think  Governor  Weicker — do  you  think  Gov- 
ernor Weicker — do  you  think  Governor  Weicker  considers  that  a 
negotiated  agreement,  sir? 


251 

Mr.  Abercrombie.  Mr.  Trump,  let 

Mr,  Trump.  Wasn't  that  forced  down  his  throat? 

Mr.  Abercrombie.  Mr.  Trump 

Mr.  Miller.  Mr.  Trump 

Mr.  Abercrombie.  Mr.  Chairman  and  Mr,  Trump,  you  asked  a 
series  of  questions.  The  chairman  is  going  to  give  you  the  answers. 
If  you  would  kindly  let  him  complete  the  answer,  then  you  can  go 
on.  After  this  colloquy,  then  I  am  going  to  move  ahead.  We  have 
other  panels  here, 

Mr,  Miller,  You  asked  the  other  question,  why  did  the  Indians 
get  the  reservations? 

Mr,  Trump,  I  didn't  ask  that  question. 

Mr,  Miller,  Well,  you  said  why  do  we  discriminate? 

Mr.  Trump,  No.  I  said — I  didn't  ask  that  question. 

Mr,  Miller,  Okay,  You  ask  the  question  again. 

Mr,  Trump.  Do  you  want  me  to  ask  another  question? 

Mr.  Miller.  No.  Ask  that  question  you  asked. 

Mr.  Trump.  I  said  to  you,  you  have  a  group  of  Indians,  I  think, 
that  has  a  reservation  in  Connecticut  that  is  making,  I  believe,  per- 
haps in  excess  of  $500  million.  There  are  a  total  of  400  people  or 
300  people,  or  a  very  small  amount  of  people  in  that  particular 
tribe.  To  make  $500  million  for  300  people,  I  ask  you — and  this  is 
a  Federal  pact,  this  is  done  with  the  auspices  of  your  office  and  al- 
lowed through  the  auspices  of  your  office — ^why  isn't  that  wealth, 
if  you  are  so  concerned,  sir,  about  the  Indians,  which  I  think  you 
should  be,  and  I  think  it  is  a  great  concern — if  you  are  so  concerned 
with  the  impact  and  the  welfare  of  the  Indians,  why  do  you  allow 
300  people  to  make  $500  million?  Why  don't  you  say  that  that 
money  has  to  be  distributed  around  so  that  other  people  can  be 
helped,  so  that  medical  care  in  other  locations  in  the  United  States, 
where  you  have  Indians  that  are  truly  living  in  poverty,  so  that 
they  can  be  taken  care  of?  How  can  you  allow  this  to  happen? 

And  what  we  are  really  doing,  and  getting  off  the  subject — ^you 
know  and  I  know  that  this  is  going  to  blow. 

Mr,  Miller.  No,  Mr.  Trump,  I  don't  know  that. 

Mr.  Trump.  Oh,  you  don't  know  it? 

Mr.  Miller.  No. 

Mr,  Trump,  Well,  I'll  tell  you  what,  I'll  see  you  in  about  two 
years,  and  we  will  see  who  is  right,  sir. 

Mr.  Miller.  Well,  let's  go  down  that— just  for  a  second,  Mr. 
Chairman. 

Mr.  Calvert  said — what  did  you  say,  Caesar's,  is  looking  for  a 
management  agreement?  You  have  tried  to  get  a  management 
agreement 

Mr.  Trump.  I  have  not. 

Mr.  Miller.  You  have  not? 

Mr,  Trump.  I  have  not. 

Mr.  Miller.  Your  corporation  hasn't- 


Mr.  Trump.  I  have  not,  sir.  That  will  be  your  second  apology,  I 
hope.  I  have  not  tried. 

Mr,  Miller.  Well,  I  have  a  letter  here  from  Mr.  Bunce  who  talks 
about  your  various  contacts  regarding  the  possibility  of  your  in- 
volvement in  a  venture,  the  Agua  Caliente,  and  I  will 


]  252 

(' 
Mr.  Trump.  Mr.  Who? 

Mr.  Miller.  Mr.  Bunce,  in  his  capacity  as  legal  counsel.  I  will 
enter  this  into  record. 

[The  information  follows:]  ^ 


253 


AFFIDAVIT 

STATE  OF  CALIFORNIA    ) 

) 
COUNTY  OF  RIVERSIDE    ) 

Richard  M.  Milanovich,  being  first  duly  sworn  on  his  oath, 

deposes  and  states  as  follows: 

1.  I  eiin  now,  and  at  all  relevant  times  mentioned  herein  have 
been,  the  duly-elected  and  serving  Chairman  of  the  Tribal  council 
of  the  Agua  Caliente  Band  of  Cahuilla  Indians  (hereinafter,  the 
"Tribe").  The  Tribe  is  a  federally-recognized  Indian  tribe  whose 
federal  Indian  reservation  is  located  in  and  around  Palm  Springs  in 
Riverside  County,  California. 

2.  This  Tribe  has  not  yet  offered  or  engaged  in  any  form  of 
gaming  (other  than  Class  I  traditional  gaming) .  The  membership  of 
the  Tribe  voted  in  January  of  1992  to  direct  the  Tribal  Council  to 
enact  an  ordinance  for  the  conduct  of  Class  II  and  Class  III  gaming 
for  the  benefit  of  all  Tribal  Members.  The  Tribal  Council 
solicited  proposal  for  this  purpose  in  mid-1992,  screened  them, 
interviewed  prospective  operators,  and  selected  a  subsidiaxry  of 
Caesars  World,  Inc.  for  this  purpose  in  August  of  1992.  After 
considerable  negotiation,  the  Tribe  entered  into  a  management 
agreement  with  this  subsidiary  in  July  of  1993,  and  has  submitted 
it  to  the  National  Indian  Gaming  Commission  in  August  of  1993, 
along  with  a  gaming  ordinance,  for  its  approval. 

3.  Prior  to  early  February  of  1993,  I  had  had  no  dealings  or 
contact  of  any  kind  with  Donald  Trump  or  his  organization. 

4.  In  early  February  of  199  3,  I  received  one  or  more 
telephone  calls  from  Mr.  Donald  TrUmp  at  the  Tribal  Office.   I  have 


84-760  O  -  94  -  9 


254 


no  record  of  them  because  I  was  in  and  took  the  call,  rather  than  •^.rv\-'« 
receiving  a  written  message.  Mr.  Trump  told  me  that  he  was^in  town 
for  the  Bob  Hope  Desert  Classic  Golf  Tournament,  and  that  he  wanted 
to  stop  by  the  Tribal  Office  to  see  me.    I  agreed  to  such  a 
meeting . 

5.  Mr.  Trump  appeared  at  the  Tribal  Office  at  about  5:00  p.m. 
on  a  day  which  I  believe  was  probably  February  11  or  12,  1993.  He 
met  with  me,  then  Vice-Chairman  Mildred  Browne,  and  then  Secretary 
Ray  L.  Patencio.   The  meeting  lasted  30-45  minutes. 

6.  At  this  meeting,  Mr.  Trump  stated  to  us  that  he  was  well 
aware  of  this  Tribe's  previous  announcement  that  it  was  negotiating 
a  management  agreement  with  Caesars  World,  Inc.  for  a  tribal  gaming 
facility  to  be  located  on  the  Agua  Caliente  Indian  Reseirvation  in 
or  near  Palm  Springs,  California.  He  asked  if  any  final  agreement 
had  been  reached  because,  if  none  had  been  reached,  then  he  would 
like  to  discuss  the  possibility  of  such  a  venture  between  the  Agua 
Caliente  Band  and  his  organization.  He  described  his  and  his 
organization's  experience  in  gaming,  and  told  us  how  his  political 
and  other  connections  could  cut  through  bureaucratic  red  tape  to 
gain  the  necessary  approvals  quickly  for  such  a  venture. 

7.  Our  answer  to  him  was  essentially  thanks,  but  no  thanks. 
We  explained  that,  although  no  such  final  agreement  between  the 
Agua  Caliente  Band  and  Caesars  World,  Inc.  had  been  reached,  such 
an  agreement  was  currently  being  negotiated.  As  long  as  we  vrere 
bargaining  with  Caesars  World,  Inc.  we  felt  we  were  obligated  to 
see  that  process  through,  rather  than  considering  any  other 
operator,   although  we  might  be  willing  to  discuss   such  a 


255 


relationship  with  others  if  and  when  negotiations  with  Caesars 
World,  Inc.  fell  through. 

8.  Mr.  Trump's  response  was  cordial.  He  said  he  understood 
our  position  and  asked  us  to  keep  him  in  mind  if  our  dealings  with 
Caesars  World,  Inc.  reached  an  impasse.  We  told  him  that  we  would. 
He  then  left. 

9.  On  February  22,  1993,  at  3:40  p.m.,  at  the  Tribal  Office, 
Mr.  Trump  called  me.  I  was  not  in  at  the  time.  My  secretary  took 
a  telephone  message,  asking  me  to  return  Mr.  Trump's  call  at  212- 
308-7868  or  212-832-2000,  and  to  ask  for  Rona.  A  copy  of  this 
telephone  message  is  attached  as  Exhibit  A. 

10.  During  March  of  1993  there  was  at  least  one  other 
telephone  conversation  to  me  at  my  home  in  Palm  Springs  from  Mr. 
Trump  in  New  York,  but  I  cannot  locate  any  confirming  documentation 
regarding  it  at  this  time. 

11.  On  March  25,  1993,  at  11:12  a.m.,  Mr.  Scott  Kasen, 
Director  of  Special  Projects  for  the  Trump  Organization,  called  me 
at  the  Tribal  Office.  I  was  not  in,  but  my  secretary  took  a 
message  to  the  effect  that  Mr.  Trump  had  asked  him  to  call  me.  A 
copy  of  this  telephone  message  is  attached  as  Exhibit  B. 

12.  As  an  apparent  follow-up  to  this  call,  Mr.  Kasen  wrote  a 

letter  to  Tribal  Secretary  Ray  L.  Patencio,  dated  March  26,  1993. 

It  arrived  on  March  29,  1993  by  DHL  Courier  Service.  Copies  of  the 

letter  and  the  shipping  label  are  attached  as  Exhibits  C  and  D. 

The  point  of  this  letter  was,  as  it  states  in  its  third  paragraph: 

It  is  no  secret  as  to  why  I  telephoned.  I 
called  you  to  express  Mr.  Trump's  interest  in 
working  with  the  Agua  Caliente  Band  of  Cahuilla 
Indians  to  construct  and  operate  a  first  class 
casino  on  the  tribe's  reservation. 


256 


13.  I  returned  this  call  by  calling  Mr.  Kasen  at  212-832-2000 
at  1:59  p.m.  on  March  30,  1993.  A  copy  of  the  Tribe's  telephone 
bill  for  this  call  is  attached  as  Exhibit  E.  The  call  was  short, 
because  I  just  repeated  our  previous  position. 

14.  Mr.  Kasen  followed  up  this  call  by  a  letter  to  me,  dated 
March  31,  1993.  A  copy  of  it  is  attached  as  Exhibit  F.  In  it,  Mr. 
Kasen  repeats  the  desire  of  the  Trump  Organization  to  discuss  a 
gaming  project  on  the  Agua  Caliente  Indian  Reservation  if  our 
negotiations  with  Caesars  World,  Inc.  fail.  He  also  asked  for  the 
names  of  other  tribes  that  might  be  interested  in  such  a  venture. 
We  did  not  reply  to  this  letter. 

15.  On  April  8,  1993  Mr.  Kasen  sent  a  message  to  me  by  FAX. 
A  copy  of  it  is  attached  as  Exhibit  G.  The  message  was,  "Please 
call  me  when  the  negotiations  stall." 

16.  On  April  21,  1993,  at  3sl5  p.m.,  I  received  another  call 
from  Mr.  Kasen.  I  was  not  in,  but  my  secretary  took  a  message  to 
"Call  next  week."  A  copy  of  this  telephone  message  is  attached  as 
Exhibit  H.   That  was  the  last  contact  that  I  had  with  Mr.  Trump  or 


his  representatives . 


Richard  M.  Milanovich,  Chairman 


Subscribed  and  sworn  before  me  on  October  [^ ,  1993  at 
,  California. 


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260 


26  March  1993 


Mr.  Ray  Leonard  Patencio 
Agua  Caliente  Band  of  Cahuilla  Indians 
960  East  Tahquitz  Canyon  Way,  #106 
Palm  Springs,  California  92262 

Dear  Ray: 

Mr.  Trump  asked  me  to  telephone  you  and  introduce  myself. 

I  am  sorry  that  we  did  not  have  a  chance  to  talk,  however,  I 
understand  you  desire  to  avoid  any  potential  conflicts  of  interest 
since  you  are  no  longer  on  the  Tribal  Council. 

It  is  no  secret  as  to  why  I  telephoned.  I  called  you  to 
express  Mr.  Trump's  interest  in  working  with  the  Agua  Caliente  Band 
of  Cahuilla  Indians  to  construct  and  operate  a  first  class  casino 
on  the  tribe's  reservation. 

The  Trump  Organization  is  the  largest  company  in  the  gaming 
industry,  and  we  are  the  only  hotel  and  casino  operator  to  achieve 
a  four-star  property  rating.  Not  only  are  we  the  only  company  to 
achieve  a  four-star  rating,  we  were  able  to  achieve  this  rating  at 
each  one  of  our  three  hotel  and  casino  properties. 

I  would  like  to  invite  you,  Richard  Milanovich  and  Mildred 
Browne  to  New  York  and  Atlantic  City  so  that  you  can  experience 
first-hand  why  Mr.  Trump  and  The  Trump  Organization  possess  the 
skills,  experience  and  resources  necessary  to  make  the  Agua 
Caliente's  casino  the  West  Coast's  finest. 

I  will  call  you  to  make  the  appropriate  arrangements  for  your 
visit. 


Kasen 
Directof  of  Special 
Projects 


THE  TRUMP  ORGANIZATION 

<VVENUE     NEW  YORK    N  Y    10022     212-832-2000     TELEX  -427715 


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Payment  Due 
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<i/06/93 

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No      Dale         Time 


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Call         Rate 
Typa        Period 


CALLS    BILLED    TO    619    778-6B 

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310  553- 
909  765- 
909  <58- 
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213  467- 
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1411 
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CA    619  325-5673 

CA   916  756-9843 

619  325-5673 

619  446-9816 

619  525-5673 

202  863-9834 

619  325-5673 

202  488-9100 


DOC  DAY 

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DOC  DAY 

DDC  DAY 

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SUBTOTAL 
TOTAL 


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FR  DAVIS  CA 
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FR  RIDGECREST  CA 
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FR  WASHINGTON  DC 


QCS 
OCS 
OCS 
DCS 
OCS 


DAY 
DAY 
DAY 
DAY 
DAY 


SUBTOTAL 
TOTAL 


1.27 
.28 
.50 
.15 
.43 
.12 
.14 
.41 

1.00 
.29 
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.15 

2.07 

t20.02 

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3.60 

1.53 

1.92 

3.76 

Z.96 

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tl5.79 


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=        fl>.^_i. 


263 


March  31.  1993 


Mr.  Richard  M.  Mllanovlch 

Chairman 

Tribal  Council 

Agua  Caliente  Band  of  Cahuilla  Indians 

960  Last  Tahquiu  Canyon  Way,  #  1 06 

Paim  Springs,  CA  92262 

Dear  Richard, 

Thanl(  you  for  returning  my  phone  cail. 

1  was  disappointed  to  learn  that  we  can  not  fomially  begin  discussions  until  your  negotiations 
with  Caesars  have  concluded.  However,  while  I  do  not  enjoy  playing  the  role  of  Brutus,  if 
negotiations  with  Caesars  should  not  progress  as  planned,  please  call  me  immediately  so  we 
can  begin  our  dialogue.  The  faster  that  we  can  start  worldng  together,  the  sooner  the  casino 
will  be  up  and  running. 

Also,  I  would  like  to  learn  more  about  those  tribes  that  you  mentioned  which  are  interested 
in  seeking  partners  for  casino  development.  I  look  forward  to  hearing  from  you  soon  -  please 
keep  in  touch. 


^asen 
Director  of  Special  Projects 


THE  TRUMP  ORGANIZATION 

785  FIFTH  AVENUE  •  NEW  YORK.  N.  Y.  10022     212    832  •  20O0     TELEX  •  427715 


264 


flPR-0e-1993     148  53     FROM       TRUtF  TOWER  26 


16193250593       P. 001 


OMUUIOUDlOll 

728  FIFTH  AVENUE 
NEW  TOTK.N.Y.  10023 
(212)833-3929 


FACSIMILE  TRAMSHISBION 


April  8.  199  3 


DATE: 


NUr4BER  OF  PAGBS 
(INCLUDING  COVER) 

8cott  Kasen 
FROM: 


212-935-0141 
FACSIMILE  NUMBER: 

If  you  did  not  reoelve  oloar  copies 
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MESSAGE : 


Dear  RlchTd, 


Mr.  Richard  Kjlanovic 
SENT  TO: 


619-325-0393 


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266 

Mr.  Trump.  Legal  counsel  of  who? 

Mr.  Miller.  The  Agua  Calientes. 

Mr.  Trump.  Oh,  you  mean  somebody  wrote  to  me  asking  for — 
that  is  not  my  people  writing,  sir. 

Mr.  Miller.  No.  He  says,  "I  am  writing  at  your  request." 

Mr.  Trump.  At  my  request? 

Mr.  Miller  [continuing].  "Concerning  your  various  contacts  re- 
garding the  possibility  of  your  involvement" 

Mr.  Trump.  Sir,  that  is  somebody  writing  a  letter  to  me,  I  am 
not  writing  a  letter  to  them.  I  don't  blame  them  for  wanting 

Mr.  Miller.  Caesar's  has  asked?  Is  that  your  information?  Oth- 
ers in  your  industry  are  seeking  management  contracts  with  var- 
ious Indian  gaming  operations  either  existing  or  in  future.  Is  that 
correct? 

Mr.  Trump.  That  is  true.  I  think  that  is  true,  yes. 

Mr.  Miller.  So  what  is  the  conclusion  to  be  drawn  from  that? 
That  they,  too,  will  have  no  ability 

Mr.  Trump.  No,  the  conclusion  is,  hey,  this  thing  is  running 
rampant,  they  are  running  public  companies  for  the  most  part, 
they  might  as  well  get  on  the  ship.  But  they  know,  and  if  they  were 
down  here  testifying,  they  know  that  when  you  have  this  many  en- 
tities, this  many — they  know,  they  are  professionals — that  you  can- 
not control  the  mob,  you  cannot  control  the  organized  crime,  you 
are  not  going  to  do  it. 

Willy  Sutton 

Mr.  Miller.  So  they  are  making  this  decision 

Mr.  Trump.  Willy  Sutton — excuse  me,  sir — ^Willy  Sutton  said  he 
robbed  banks,  he  said  that  is  where  the  money  is.  Well,  the  mob 
is  going  into  the  casinos,  and  what  they  are  doing  is,  they  are  going 
into  the  Indian  casinos  because,  sir,  that  is  where  the  money  is, 
but  also  that  is  where  the  lack  of  enforcement  is. 

Mr.  Miller.  Why  is  your  industry- 

Mr.  Trump.  Sir,  that  is  where  the  lack  of  enforcement  is. 

Mr.  Miller.  Why  are  members  of  your  industry  going  there 
when  obviously 

Mr.  Trump.  Because  they  want  to  make  money. 

Mr.  Miller.  Wait  a  minute.  If  they  were  to  be  involved  with  or- 
ganized crime  or  any  kind  of  criminal  activity,  it  would,  I  assume, 
under  both  Nevada's  law  and  New  Jersey's,  would  reflect  on  your 
ability  to  continue  to  hold  a  license,  would  it  not? 

Mr.  Trump.  Because  they  want  to  make  money,  sir,  because  they 
really  want  to  make  money,  and  I  have — ^you  know,  I  have  a  great 
love  for  this  country.  I  happen  to  be 

Mr.  Miller.  It  is  quite  possible  for  a  reservation  to  enter  into  a 
gaming  contract,  management  contract,  with  somebody  in  your  in- 
dustry— I  don't  know  about  other  people  on  the  outside,  these  com- 
panies that  are  being  formed — ^but  in  terms  of  your  industry,  to 
enter  in  with  the  Mirage  or  with  Caesar's  or  former  executives  of 
those  people  who  have  their  own  private  operations.  An  Indian 
tribe  could  enter  into  that  and  have  a  great  bulwark  against  orga- 
nized crime  because  that  operator  would  have  to  say,  "I  cannot  do 
business  with  you  people,  I  cannot  let  this  go  on,  because  my  li- 
cense is  at  risk." 


267 

Mr.  Trump.  I  didn't  say  the  companies  are  honest.  I  said  the  reg- 
ulatory process  is  honest.  The  regulatory  process  is  a  huge  and 
cumbersome  thing  that,  in  the  end 

Mr.  Miller.  But  there  clearly  is  a  way — there  clearly  is  a 
way 

Mr.  Trump.  Do  you  want  me  to  answer  the  question? 

Mr.  Miller.  There  clearly  is  way  for  those  casinos  to  do  business 
outside  of  organized  crime  because  they  are  doing  business  with 
people  who  have  a  great  stake 

Mr.  Trump.  The  regulatory 

Mr.  Miller.  Is  that  not  true? 

Mr.  Trump.  The  regulatory  process- 


Mr.  Miller.  I  understand  the  regulatory  process. 

Mr.  Trump.  The  regulatory  process,  in  a  limited  number  of  loca- 
tions, can  keep  casino  gaming  honest.  When  you  open  up  hundreds 
of  locations  randomly  without  even  State  control — I  am  not  saying 
State  or  anything,  but  without  any  control — ^there  is  no  way  to  keep 
that  honest,  whether  I  run  it,  whether  Caesar's  runs,  whether  the 
Indians  are  running  it.  There  is  no  way.  You  have  too  many  places, 
you  have  too  much  money  involved.  The  mob  is  going  to  take  over 
it.  It  is  starting  to  come  out.  It  will  start  coming  out  a  lot  more, 
and  in  two  years,  sir,  you  are  going  to  be  a  very  embarrassed  man. 

Mr.  Abercrombie.  Mr.  Trump  and  Mr.  Miller — Mr.  Miller  you 
will  have  the  concluding  remark. 

Mr.  Miller.  Let's  just  understand  one  thing. 

Mr.  Trump.  Thank  you,  sir. 

Mr.  Abercrombie.  Speaking  of  running  things,  I  am  running  the 
committee.  So  Mr.  Miller  will  conclude  in  as  much  as  he  is  the 
chairman. 

Mr.  Miller.  You  want  to  keep  suggesting  that  somehow  there  is 
no  regulatory  scheme  for  these  reservation  gaming  sites.  The  fact 
is,  there  is  in  almost  every  instance.  Obviously,  where  you  have 
compacts  the  governors  are  concerned  about  their  citizens  as  you 
are,  and  we  now  have,  I  don't  know,  what,  26  governors  that  have 
entered  into  compacts  with  various  tribes. 

Mr.  Trump.  They  have  had  no  choice,  sir. 

Mr.  Miller.  You  have  the  whole  regulatory  scheme  of  the  Gam- 
ing Commission.  Most  of  the  cases  you  cite  were  before  the  Gaming 
Commission.  They  have  the  memorandum  of  understanding  with 
the  FBI.  The  tribes  have  under  the  trust  relationship  a  direct  ac- 
cess to  the  FBI,  to  the  Treasury  Department,  to  the  Attorney  Gen- 
eral of  the  United  States, 

You  keep  wanting  to  paint  this  picture  as  somehow  these  people 
are  off  just  willy-nilly  doing  business.  The  fact  is,  that  isn't.  Many 
of  the  contracts  that  were  cited  in  the  evidence  you  presented — to 
date,  when  they  were  signed  they  weren't  under  the  scrutiny.  The 
Secretary  didn't  have  to  approve  them.  Today  the  Secretary  does. 
The  arrangement  in  New  Jersey,  as  I  think  you  pointed  out,  isn't 
allowed,  the  potential  arrangement  isn't  allowed  under  the  existing 
law,  as  Senator  Inouye  testified.  I  appreciate  the  theory,  but  it  isn't 
allowed  under  the  existing  law. 

The  fact  is,  if  they  entered  into  a  management  agreement,  that 
management  agreement  would  have  to  be  signed  off  by  this  Sec- 
retary of  the  Interior.  So  the  suggestion  you  have  painted  is  that 


268 

somehow  these  people  are  doing — you  used  the  term  "deregulated" 
or  "unregulated,"  completely  outside  the  scheme  of  regulation,  com- 
mensurate with  this  industry,  and  the  fact  is,  they  are  not. 

Mr.  Trump.  Sir,  I  will  just  give  you  a  quick  answer,  and  then  the 
Congressman  will  give  you  a  much  more  appropriate  answer  to 
something  else.  I  will  tell  you  that,  you  asked  me  about  governors, 
and  you  said  the  governors  are  routinely  signed.  The  governors  are 

being  forced 

Mr.  Miller.  These  are  hard  bargainers. 

Mr.  Trump.  Sir,  they  are  not  hard  bargaining,  because  if  Mario 
Cuomo  didn't  sign  his  pact  in  Syracuse,  the  Indians  were  going  to 
court,  and  they  would  have  won  on  summary  judgment  based  on 
the  ridiculous  law  that  was  passed,  okay?  So  it  is  not  hard  bargain- 
ing. He  sat  there  and  he  had  absolutely  no  choice. 

Lowell  Weicker,  who  I  have  great  respect  for,  fought  and  fought 
and  fought  and  ultimately  was  bludgeoned  into  having  to  accept 
this,  and  he  is  not  happy  about  it,  and  Connecticut  is  not  happy 
about  it,  and  Connecticut  is  a  total  disaster  over  Indian  gaming. 
Mr.  Abercrombie.  Thank  you,  Mr.  Trump. 
Mr.  Trump.  They  have  created  a  monster. 
Mr.  Abercrombie.  Thank  you,  Mr.  Trump. 

Mr.  Torricelli,  in  as  much  as  you  are  also  a  part  of  the  panel, 
we  will  conclude  this  panel  with  your  remarks. 
Mr.  Torricelli.  Thank  you. 

Hesitant  though  I  am  to  engage  in  this  conversation 

Mr.  Abercrombie.  And  then  we  will  move  on  to  our  next  exciting 
panel. 

Mr.  Torricelli.  Allow  me  just  to  conclude  for  a  moment  simply 
with  this.  There  is  much  that  is  not  known  on  the  problems  of  In- 
dian gaming.  The  intention  here  today  was  to  reflect  simply  on  a 
few  things  that  we  do  know. 

The  inspector  general  has  concluded  that  there  is  fraud  and 
abuse  that  is  costing  Indian  tribes  millions  of  dollars.  We  have  at- 
tempted to  establish  that  there  are  not  sufficient  Federal  resources, 
indeed  an  absence  of  FBI  and  IRS  presence,  to  deal  with  the  prob- 
lem of  money  laundering  and  the  presence  of  organized  crime. 

We  cannot,  we  could  never,  come  before  you,  Mr.  Chairman,  to 
the  degree  that  you  would  like  with  evidence  to  establish  this  fact. 
That  was  not  our  intention.  It  was  not  our  intention  to  prove  every- 
thing that  has  taken  place,  simply  the  absence  of  what  we  know. 
But  in  all  fairness,  I  think  we  are  approaching  this  in  a  reverse 
fashion.  To  cite  that  Caesar's  or  other  legitimate  institutions  have 
management  contracts  or  will  be  involved  in  the  industry  hardly  is 
the  way  to  approach  the  problem.  It  is  not  enough  that  there  are 
some  legitimate  people  in  the  industry,  the  problem  is  that  there 
are  illegitimate  people  in  the  industry.  We  can't  be  satisfied  be- 
cause there  are  a  few  good  participants,  even  that  most  are  good 
participants.  The  fact  that  some  are  not,  I  think  that  is  how  the 
issue  should  be  approached. 

The  legislation  I  have  submitted  to  this  committee  for  its  review 
is  simply  this.  That  the  negotiating  process  is  not  working. 

Yes,  Mr.  Miller,  if  there  were  compacts  in  all  States  legitimately 
and  honestly  agreed  to  on  an  equal  basis,  we  would  not  have  a 


269 

problem.  Forty  of  these  casinos  are  operating  with  no  compacts,  no 
State  agreements  whatsoever. 

As  has  been  testified,  many  of  them,  as  in  the  States  of  New 
York  and  Connecticut,  were  against  the  wishes  of  the  States  be- 
cause they  were  going  to  be  compelled  by  Federal  courts. 

I  have  submitted  legislation  that  is  simple  on  its  face.  I  do  not 
believe  any  industry  in  this  country  should  be  the  reserve  of  any 
group.  I  know  one  person  who  has  come  here  today  testifjdng 
against  any  discrimination,  me.  Any  citizen  of  this  country  that 
wants  to  operate  casino  gaming  should  be  able  to  do  so  on  an  equal 
basis,  same  law,  same  taxes,  same  investigations,  same  regula- 
tions, period,  no  distinctions.  You  make  the  grade,  or  you  do  not. 
That  is  the  legislation  that  I  have  given  you,  that  it  be  regulated 
and  done  fairly  with  revenues  returned.  That  is  the  suggestion  I 
give  to  you.  I  hope  we  have  made  a  contribution.  We  have  tried  to 
do  so.  I  leave  it  to  you  for  your  review. 

Mr.  Abercrombie.  Thank  you  very  much,  Mr.  Torricelli. 

Thank  you  very  much,  Mr.  Trump. 

Mr.  Trump.  Thank  you,  sir. 

PANEL  CONSISTING  OF  HON.  ADA  E.  DEER,  ASSISTANT  SEC- 
RETARY OF  INDIAN  AFFAIRS,  BUREAU  OF  INDIAN  AFFAIRS, 
U.S.  DEPARTMENT  OF  THE  INTERIOR,  ACCOMPANIED  BY 
HILDA  A.  MANUEL,  DIRECTOR,  INDIAN  GAMING  MANAGE- 
MENT STAFF,  AND  THEODORE  R.  QUASULA,  CHIEF,  DIVISION 
OF  LAW  ENFORCEMENT;  HON.  ANTHONY  J.  HOPE,  CHAIR- 
MAN, NATIONAL  INDIAN  GAMING  COMMISSION;  HON.  JOEL 
FRANK,  COMMISSIONER,  NATIONAL  INDIAN  GAMING  COM- 
MISSION; AND  MICHAEL  D.  COX,  GENERAL  COUNSEL,  NA- 
TIONAL INDIAN  GAMING  COMMISSION,  ACCOMPANIED  BY 
HON.  JANA  McKEAG,  COMMISSIONER 

Mr.  Abercrombie.  Now  we  will  move  on  to  our  third  panel,  and 
I  think  that  some  of  the  questions  that  have  been  raised  during  the 
first  two  panels  can  be  addressed  and  probably  will  be  addressed 
both  in  the  testimony  and  subsequent  discussion:  The  Honorable 
Ada  Deer,  assistant  secretary  for  Indian  affairs  in  the  Bureau  of 
Indian  Affairs  of  the  Department  of  the  Interior.  The  assistant  sec- 
retary will  be  accompanied  by  the  director  for  the  Indian  gaming 
management  staff,  the  chief  of  the  Division  of  Law  Enforcement  for 
the  Indian  gaming  management  staff;  the  chairman  and  commis- 
sioners of  the  National  Indian  Gaming  Commission,  as  well  as 
their  general  counsel,  Mr.  Cox. 

I  trust  that  at  least  some  of  the  media  will  remain  to  get  some 
of  the  answers  that  could  be  forthcoming  as  opposed  to  some  of  the 
celebrity  "Family  Feud"  activity  that  they  seem  more  interested  in. 

Secretary  Deer,  I  commend  you  for  your  patience.  I  notice  that 
you  were  more  than  anxious  on  several  occasions  to  want  to  re- 
spond, and  those  accompanying  you,  I  think,  were  anxious  to  do  so 
as  well.  So  I  won't  hold  up  that  opportunity  any  longer,  and  I 
would  ask  you  to  go  ahead  with  your  testimony.  The  full  sum  of 
it,  of  course,  is  in  the  record.  You  can  summarize  if  you  wish,  and 
then  we  will  move  on  to  questions  and/or  commentary  from  you 
and  those  accompanying  you,  and  if  during  the  course  of  your  testi- 


270 

mony  you  would  like  to  defer  momentarily  to  anyone  accompanying 
you,  feel  free  to  do  so,  and  I  forgot  to  say  Aloha  and  welcome. 

STATEMENT  OF  HON.  ADA  E.  DEER 

Ms.  Deer.  Thank  you  very  much,  Mr,  Chairman  and  Members 
of  the  Committee.  I  am  delighted  to  be  here  and  to  offer  testimony 
on  the  implementation  of  the  Indian  Gaming  Regulatory  Act,  with 
special  emphasis  on  law  enforcement  issues. 

I  have  two  members  of  my  staff  with  me  today  who  can  answer 
specific  questions  on  technical  or  program  issues  if  necessary.  We 
have  Ms.  Hilda  Manuel,  Director  of  the  Indian  Gaming  Manage- 
ment staff,  and  Mr.  Ted  Quasula,  Chief  of  the  Division  of  Law  En- 
forcement. 

I  would  like  to  present  a  summary  of  my  statement  and  to  re- 
quest that  the  full  text  of  my  prepared  statement  be  made  a  part 
of  the  record.  I  am  very  conscious  of  the  time,  and  I  want  to  note 
that. 

Mr.  Abercrombie.  It  will  be. 

Ms.  Deer.  As  many  of  you  know,  I  have  devoted  my  life  to  being 
an  advocate  for  change,  change  that  provides  for  accountability.  My 
efforts  in  holding  the  U.S.  Government  accountable  for  terminating 
the  Menominee  Tribe  of  Wisconsin  are  a  prime  example. 

Today,  my  concern  lies  with  ensuring  that  Indian  gaming  oper- 
ations are  successful  and  that  these  operations  comply  with  the  let- 
ter and  spirit  of  the  Indian  Gaming  Regulatory  Act. 

As  a  social  worker,  I  measure  the  success  of  gaming  in  very  basic 
terms.  Does  it  provide  housing,  education,  and  employment  oppor- 
tunities for  tribal  members?  The  answer  is  a  resounding  yes.  As  a 
matter  of  policy,  the  Department  supports  Indian  gaming  and  is 
committed  to  the  goals  and  objectives  of  the  Indian  Gaming  Regu- 
latory Act. 

We  have  all  heard  about  the  successes  of  Indian  gaming  on  In- 
dian lands.  There  is  no  doubt,  Indian  gaming  has  become  a  major 
economic  development  activity  for  Indian  tribes.  Many  Indian 
tribes  now  provide  better  governmental  services,  better  health  care, 
higher  quality  educational  benefits,  employment,  and  have  a  source 
of  capital  for  other  economic  development  investments. 

In  States  such  as  Minnesota,  Wisconsin,  and  Michigan,  poverty, 
alcoholism,  unemployment,  juvenile  delinquency,  and  other  social 
problems  have  been  significantly  reduced  and  positively  addressed 
by  the  economic  benefits  brought  by  gaming  to  the  tribes.  Regret- 
tably, tribal  efforts  to  better  not  only  the  economic  conditions  of 
their  own  communities  but  also  that  of  neighboring  communities 
have  been  met  with  contentious  debate  and  opposition. 

A  focal  point  of  this  ongoing  debate  is  a  perception  by  Indian 
gaming  opponents  that  Indian  tribes  have  been  provided  an  unfair 
advantage  over  other  citizens.  Congress  intended  to  allow  Indian 
tribes  a  comparative  edge  because  of  the  economic  reality  on  Indian 
reservations.  Congress  correctly  perceived  that  this  is  the  result  of 
centuries  of  advantage  that  have  been  granted  to  non-Indian  com- 
munities and  continues,  in  many  respects,  today.  This  reality  is 
characterized  by  few  natural  resources,  limited  finances,  lack  of  a 
tax  base,  shortage  of  business  capital  and  equity,  underdeveloped 
infrastructures,  geographic  remoteness  from  sizable  markets,  inad- 


271 

equate  roads  and  transportation  systems,  and  a  lack  of  trained, 
educated,  or  skilled  workforces. 

But  Indian  nations  and  peoples  have  survived  these  and  other 
disadvantages  because  of  our  innate  intelligence,  courage,  pride 
and  tenacity.  We  are  continually  searching  for  a  means  to  engender 
self-reliance  that  are  compatible  with  our  cultures,  values,  and  the 
environment. 

Concerns  about  the  integrity  of  Indian  gaming,  its  scope  and 
scale,  the  need  for  acceptable  licensing  and  law  enforcement  capa- 
bilities to  keep  out  criminal  elements  have  dominated  the  agendas 
of  national  meetings,  conferences  at  all  levels  of  Federal,  State,  and 
Tribal  Governments. 

The  Department  does  not  discount  the  potential  for  law  enforce- 
ment problems,  especially  in  an  industry  with  large  cash  trans- 
actions. We  have  no  reason  to  believe  that  Indian  gaming  oper- 
ations are  any  more  susceptible  than  any  other  gaming  operation, 
nor  do  we  think  that  Indian  gaming  is  in  any  way  immune  from 
such  criminal  elements. 

The  Department  believes  that,  on  the  average,  the  regulatory 
and  enforcement  efforts  of  all  parties.  Federal,  State,  local,  and 
tribal  law  enforcement  agencies,  have  done  a  commendable  job  to 
keep  Indian  gaming  free  of  law  enforcement  problems.  We  also  be- 
lieve that  Indian  tribes  themselves  have  undertaken  notable  efforts 
to  ensure  that  Indian  gaming  activities  are  clean,  honest,  and  free 
of  criminal  elements. 

Tribal  gaming  enterprises  have  installed  sophisticated  video  sur- 
veillance systems  in  their  establishments  which  match  or  exceed 
those  found  in  non-Indian  gaming  establishments.  Videotapes  of 
criminal  activity  gathered  by  these  systems  is  used  as  evidence  in 
the  prosecution  of  suspects. 

Many  gaming  operations  employ  off-duty  police  officers  who,  be- 
cause of  their  certification,  can  take  immediate  action  when  con- 
fronted with  criminal  activity.  Cooperative  and  ongoing  coordina- 
tion among  all  law  enforcement  agencies  has  become  the  mainstay 
in  ferreting  out  criminal  elements. 

In  closing,  I  want  to  say  that  while  we  cannot  guarantee  that  In- 
dian gaming  is  free  of  criminal  influences  or  that  nothing  will  go 
wrong,  we  do  believe  that  there  is  sufficient  law  enforcement  pres- 
ence and  oversight  to  discourage  and  deter  criminal  elements. 

Indian  nations  and  peoples  have  survived  these  and  other  dis- 
advantages because  of  our  intelligence,  courage,  pride,  and  tenac- 
ity. We  are  continually  searching  for  means  of  self-reliance  that  are 
compatible  with  our  culture,  our  values,  and  our  environment. 

This  concludes  my  summary,  and  I  will  be  happy  to  answer  fur- 
ther questions. 

[Prepared  statement  of  Ms.  Deer  follows:! 


272 


STATEMENT  OF  ADA  E.  DEER,  ASSISTANT  SECRETARY  -  INDIAN 
AFFAIRS,  DEPARTMENT  OF  THE  INTERIOR,  BEFORE  THE  SUBCOMMITTEE 
ON  NATIVE  AMERICAN  AFFAIRS  OF  THE  COMMITTEE  ON  NATURAL 
RESOURCES,  U.S.  HOUSE  OF  REPRESENTATIVES,  ON  THE  OVERSIGHT 
HEARING  ON  THE  IMPLEMENTATION  OF  THE  INDIAN  GAMING 
REGULATORY  ACT  WITH  REGARD  TO  LAW  ENFORCEMENT  ISSUES. 

October  5,  1993 


Good  morning  Mr.  Chairmem  emd  members  of  the  Committee,  I  eun 
pleased  to  present  the  views  of  the  Department  of  the 
Interior  on  the  implementation  of  the  Indiem  Geuning 
Regulatory  Act  (IGRA),  with  particular  emphasis  on  law 
enforcement  issues.  This  hearing  on  Indian  Gaming  is  timely 
in  view  of  the  current  effort  by  state  emd  tribal 
representatives  to  reach  consensus  on  possible  eunendments  to 
the  IGRA. 

I  will  begin  with  some  general  remarks  on  Indieui  gaming  as 
an  economic  development  activity,  followed  by  specific 
remarks  on  law  enforcement  issues. 

As  we  all  know,  geuning  on  Indian  lands  has  become  a  major 
economic  development  activity  for  Indiem  tribes,  eind  we  eure 
witnessing  em  iinprecedented  growth  in  Indicui  gambling 
operations.  However,  this  growth  has  not  been  without 
controversy  emd  criticism.  Concerns  about  the  integrity  of 
Indian  geuning,  its  scope  and  scale,  the  need  for  accepteUale 
licensing,  emd  law  enforcement  capedsilities  to  keep  out 
criminal  elements  have  dominated  the  agendas  of  meetings 
and  conferences  at  all  levels  of  Federal,  state  emd  tribal 
governments.  Voices  from  all  sides  have  offered  their 
opinions  on  the  pros  and  cons  of  Indiem  geuning.  As  a  matter 
of  Federal  policy,  we  support  Indiem  geuning  emd  are 
committed  to  the  goals  emd  objectives  of  IGRA. 


-1- 


273 


The  principal  goals  of  the  IGRA  are  to  promote  tribal 
economic  development,  self-sufficiency  amd  strong  tribal 
governments.  A  majority  of  the  gaming  tribes  will  tell  you 
unequivocally  that  Indiein  gaming  has  greatly  enhemced  their 
economic  sufficiency.  These  tribes  now  provide  better 
governmental  services,  better  health  care,  higher  quality 
education  benefits,  and  employment  and  housing  for  tribal 
members.  They  also  have  a  source  of  capital  for  other 
economic  development  investments.  Geuning  revenues  have 
provided  a  reliable  source  of  fvmds  to  support  tribal 
government  operations  emd,  in  several  instances,  tribes  have 
also  made  contributions  to  local  governments  for  roads, 
schools,  police  protection  cind  social  service  progreuns  to 
help  mitigate  the  impacts  expected  from  Indiem  gaming. 

Indian  nations  emd  peoples  have  survived  memy  disadvantages 
because  of  our  innate  intelligence,  courage,  pride,  and 
tenacity.  We  are  continually  searching  for  meems  of  self- 
reliance  that  are  compatible  with  our  cultures,  values,  and 
our  environment.  The  economic  benefits  brought  by  gaming  to 
the  tribes  have  significantly  reduced  and  positively 
addressed,  poverty,  alcoholism,  unemployment,  juvenile 
delinquency  and  other  social  problems. 

Some  of  these  tribal  efforts  to  better  not  only  the  economic 
conditions  of  their  own  communities  but  also  that  of 
neighboring  communities,  have  been  met  with  contentious 
debate  and  opposition. 

A  focal  point  of  this  ongoing  debate  is  a  perception  by 
Indian  gaming  opponents  that  Indicin  tribes  have  been 
provided   an   unfair   advantage   over   other   citizens. 


-2- 


274 


Congress  intended,  however,  to  allow  Indian  tribes  a 
comparative  edge  because  of  the  economic  reality  on  Indian 
resezrvations . 

Indiem  tribes  are  governments  and  as  governments,  they  need 
to  provide  essential  services  to  their  constituencies.  Like 
any  government,  they  need  revenue.  Thirty-five  of  the  50 
state  governments  have  chosen  to  operate  lotteries  for 
public  finamce.  Like  states  that  operate  lotteries,  Indian 
tribes  operate  gaming  enterprises  for  public  or  governmental 
finamce,  not  for  private  business  profit. 

The  success  of  Indian  gaming  has,  however,  been  subject  to 
specific  limitations  and  requirements.  Of  all  the  gaming  in 
this  Country,  only  Indian  gaming  is  subject  to  Federal 
regulation  amd  oversight.  Only  Indiam  tribes  are  mandated 
by  Federal  law  to  dedicate  gaming  revenues  to  statutorily 
defined  uses  and  purposes.  If  an  Indian  tribe  wcints  to 
share  gaming  revenues  with  tribal  members  by  making  per 
capita  payments,  the  tribe  is  required  to  prepare  a  Revenue 
Allocation  Plan  indicating  how  all  the  geuning  revenues  will 
be  used  and  must  include  the  per  capita  distribution  plan. 
This  Plan  cemnot  be  implemented  until  it  is  approved  by  the 
Secretary  of  the  Interior. 

Indian  tribes  are  striving  to  be  better  neighbors  than  their 
neighbors  have  been  to  them.  Although  not  memdated,  Indian 
tribes  are  mindful  of  the  potential  negative  effects  that 
gambling  may  have  on  society  and,  in  memy  cases,  undeninrite 
a  large  share,  if  not  all,  of  the  costs  for  reducing  or 
alleviating  such  negative  social  effects  eind  impacts  of 
gaming.  Meiny  Indian  tribes  contribute  to  local  charities 
and  help  fund  local  education  projects  ernd  government 
agencies  whose  services  extend  across  the  spectrum  of 


275 


community  need.   And  for  the  first  time  in  history,  Indian 

gaming  has  proven  to  be  a  win-win  situation.   Mamy  Indiem 

tribes  now  stand  poised  to  achieve  economic  self- 
sufficiency. 

Unfortunately,  the  right  of  Indiein  tribes  to  geune  is 
expected  to  be  revisited  by  Congress  as  a  result  of  the 
continuing  conflicts  between  some  tribes  emd  some  states 
over  the  scope  of  gaming  and  related  regulatory  emd 
operational  issues.  Highly  publicized  claims  by  Indian 
gaming  opponents  that  tribal  gaming  operations  are 
unregulated  and  highly  susceptible  to  infiltration  by 
criminal  elements  have  also  contributed  to  the  decision  to 
reopen  the  IGRA  for  amendments. 

The  Department  is  keenly  aware  that  the  geuning  industry  with 
its  large  cash  transactions  has  always  been  an  attractive 
target  for  criminal  elements.  We  have  no  reason  to  believe 
that  Indian  gaming  operations  are  emy  more  susceptible  than 
any  other  geuning  operation  nor  do  we  think  that  Indian 
gaming  is  in  any  way  immune  from  such  criminal  elements.  In 
fact,  some  law  enforcement  problems  have  occurred.  From  a 
law  enforcement  perspective,  our  greatest  concern  is  that 
the  integrity  of  Indian  gaming  could  be  compromised  through 
criminal  infiltration.  In  this  regard,  the  BIA  Division  of 
Law  Enforcement  Services  (DLES),  maintains  close 
communication  with  other  law  enforcement  agencies  to  help 
prevent  orgemized  crime  involvement,  to  help  keep 
undesirables  out  of  Indian  geuning,  suid  to  help  maintain 
public  order. 

Criminal  activities  known  to  be  inherent  to  the  gambling 
industry  reuige  from  sophisticated  skimming  and  money 
laundering  operations  to  crude  schemes  to  cheat  at  card 
games  or  to  rig  gambling  devices.   Ovir  involvement  in  cases 


-4- 


276 


associated  with  traditional  Orgemized  Crime  activities  has 
been  secondary  and  limited.  The  lead  agency  with  authority 
to  investigate  traditional  Orgemized  Crime  is  the  Federal 
Bureau  of  Investigation  ( FBI ) .  To  our  knowledge ,  the  FBI 
has  had  only  one  orgcinized  crime  infiltration  case  that 
involved  Indian  geuning.  This  case  was  successfully 
prosecuted  and  resulted  in  imprisonment  of  ]cnown  orgemized 
crime  figiires. 

The  DLES  plays  a  more  active  role  in  cases  which  may  be 
referred  to  as  non-traditional  orgemized  crime.  For 
excimple,  small  groups  of  individuals  will  band  together 
with  the  specific  purpose  to  prey  on  gaming  estciblishments. 
These  individuals  conduct  their  illegal  scams  and  cheating 
for  short  periods  of  time  before  moving  to  another  gaming 
establishment.  These  criminals  do  not  discriminate  and  have 
targeted  Indian  emd  non-Indian  gaming  operations .  The 
losses  attributed  to  individuals  in  these  groups  may 
constitute  several  thousand  dollars  a  day.  There  have  been 
isolated  cases  of  this  type  of  criminal  activity.  Through  a 
coordinated  and  cooperative  effort  among  the  BIA  and  tribal, 
state,  and  county  law  enforcement  agencies  these  cases  have 
been  successfully  investigated  cind  prosecuted. 

It  is  noteworthy  to  mention  that  in  many  instances,  tribes 
have  provided  valucJjle  support  in  the  successful 
apprehension  of  these  types  of  criminals.  Most  tribal 
gaming  enterprises  have  installed  sophisticated  video 
surveillance  systems  which  capture  the  criminals  on  tape. 
The  videotapes  are  later  used  as  evidence  in  the  prosecution 
of  these  criminal  cases.  Moreover,  many  gaming  operations 
employ  off-duty  certified  police  officers  who,  because  of 
their  certification  status,  Cein  take  immediate  action  when 
confronted  with  criminal  activity.  We  also  have  learned 
that  many  tribal  geiming  operations  employ  retired  police 


277 


officers  in  their  security  programs. 

The  DliES  has  also  been  instrumental  in  assisting  our  Office 
of  the  Inspector  General,  Department  of  the  Interior,  with 
the  investigation  of  crimes  involving  theft  or  embezzlement. 
These  types  of  crimes  may  be  committed  by  tribal  officials, 
gaming  management  personnel  or  employees.  We  have  found  in 
these  types  of  cases  that  the  geuning  operation  often  lacked 
good  internal  controls  and  security  procedures.  In  some 
cases,  an  inadequate  background  investigation  of  gauning 
employees  also  was  a  contributing  factor  to  the  criminal 
activity. 

Although  the  DLES  does  not  always  lead  the  investigation  of 
geuning  offenses,  it  has  been  involved  in  every  major  case  in 
some  meinner.  The  relationship  that  is  maintained  with  the 
various  federal,  state,  local  eind  tribal  law  enforcement 
agencies  has  proven  to  be  a  valucible  tool  for  sharing 
information  and  for  monitoring  the  movement  of  suspected  or 
known  criminal.  On  the  national  level,  BIA  law  enforcement 
officials  along  with  tribal  law  enforcement  officials  work 
closely  with  the  top  leadership  of  the  International 
Association  of  Chiefs  of  Police  to  keep  the  lines  of 
communication  open  on  law  enforcement  issues  related  to 
gaming . 

In  closing,  I  want  to  say  that  while  we  ceinnot  guarantee 
that  Indiem  gaming  is  free  of  criminal  influences  or  that 
nothing  will  go  wrong,  we  do  believe  that  there  is 
sufficient  law  enforcement  presence  amd  oversight  to 
discourage  and  deter  criminal  elements.  Inasmuch  as  Indian 
gaming  is  the  only  gaming  subject  to  Federal  regulation, 
every  level  of  the  nation's  law  enforcement  structure  has  an 
opportunity  to  become  involved.  Cooperative  and  ongoing 
coordination  among  all  law  enforcement  agencies  including 


-6- 


278 


the  BIA  has  become  the  mainstay  of  ferreting  out  criminal 
problems.  In  the  States  of  Arizona,  South  Dakota,  Minnesota 
and  Wisconsin,  the  various  Federal,  state,  local  emd  tribal 
law  enforcement  agencies  have  orgemized  formal  task  forces 
under  the  auspices  of  the  U.S.  Attorney's  Office  to  review 
and  address  difficult  or  peculiar  law  enforcement  problems 
related  to  gaming.  It  seems  appropriate  then  that  these 
States  have  become  models  of  a  new  cooperative  approach  to 
resolving  law  enforcement  problems  associated  with  all  types 
of  gaming. 

This  concludes  my  prepared  statement.  I  will  be  happy  to 
answer  any  questions  that  you  or  members  of  the  Committee 
may  have. 


-7- 


279 


United  States  Department  of  the  Interior 

OKFICE  OF  THE  SECRETARY 
WASHINGTON,  DC.     20240 

Honorable  Bill  Richardson  ' -^  •    '      i^'vj 

Chairman,  Subcommittee  on  Native  American  Affairs 

Committee  on  Natural  Resources  '         >■■'■: 

House  of  Representatives 

Washington,  DC    20515 

Dear  Mr.  Richardson: 

On  October  5,  1993,  the  Department  of  the  Interior  and  the  Bureau  of  Indian 
Affairs  (BIA)  provided  testimony  regarding  law  enforcement  issues 
associated  with  Indian  gaming  operations  before  the  Subcommittee  on 
Native  American  Affairs  House  Committee  on  Natural  Resources.    The 
Division  of  Law  Enforcement  was  requested  by  the  Honorable  Neil 
Abercrombie  to  provide  comment  on  testimony  provided  by  Mr.  David  B. 
Palmer,  Deputy  Assistant  Commissioner  (Criminal  Investigation),  Internal 
Revenue  Service  (IRS). 

Mr.  Palmer  provided  a  general  overview  of  various  federal  laws,  including  the 
Bank  Secrecy  Act,  designed  to  safeguard  against  money  laundering  and  to 
provide  assistance  to  the  IRS  in  its  anti-money  laundering  enforcement  and 
tax  administration.    Mr.  Palmer  explained  the  limitations  of  these  statutes  as 
they  apply  to  tracking  money  transactions  in  Indian  gaming  operations. 

The  integrity  of  gaming  operations  must  be  safeguarded  against  incursions 
by  organized  crime  to  ensure  that  Indian  gaming  remains  a  viable  source  of 
economic  development  for  Indian  communities.    To  this  end,  the  law 
enforcement  community  needs  to  have  available  all  of  the  tools  and 
resources  to  adequately  protect  the  Indian  community  and  to  prevent  illegal 
activity  from  siphoning  off  much  needed  funds. 

The  Department  of  the  Interior  and  the  BIA  concur  with  the  recommendation 
by  the  IRS  that  the  Indian  Gaming  Regulatory  Act  (IGRA)  and  the  Bank 
Secrecy  Act  be  amended  to  specify  that  Indian  gaming  operations  be  subject 
to  the  Bank  Secrecy  Act  rather  than  to  Section  60501.    Such  an  amendment 
would  ensure  a  more  complete  reporting  and  tracking  process  for  cash 
transactions  over  the  threshold  figure. 


280 


We  thank  the  subcommittee  for  the  opportunity  to  provide  a  response  to 
Mr.  Palmer's  testimony.    Please  contact  this  office  if  there  are  any  further 
questions  regarding  law  enforcement  issues  related  to  Indian  gaming 
operations. 

Sincerely, 


^   .  Ada  Deer  / 

"'"^'  V  Assistant  Secretary  -  Indian  Affairs 


281 

Mr.  Abercrombie.  Thank  you  very  much. 

Would  you  care  to  have  any  of  your  associates  comment?  Or  may 
I  just  ask  them  directly?  What  is  your  pleasure?  Obviously,  they 
have  heard  testimony  all  the  way  from  the  IRS  to  Mr.  Trump's — 
I  guess  you  could  call  them  contentions. 

Ms.  Deer.  Let  me  say  his  selective  interpretation  of  the  facts. 

Mr.  Abercrombie.  Yes,  as  you  say. 

In  any  event,  would  you  care  to  call  anyone  in  particular?  Other- 
wise, I  have  some 

Ms.  Deer.  We  are  here  at  the  committee's  pleasure  to  answer 
your  questions. 

Mr.  Abercrombie.  Okay. 

Commissioner  McKeag,  am  I  pronouncing  your  name  correctly? 

Ms.  McKeag.  Correct. 

Mr.  Abercrombie.  You  are  a  Commissioner  on  the  National  In- 
dian Gaming  Commission,  correct? 

Ms.  McKeag.  That  is  correct. 

Mr.  Abercrombie.  Do  you  have  any  comment  on  the  contentions 
that  were  made  with  respect  to  the  ability  of  the  Commission  and/ 
or  any  of  its  affiliates,  the  Indian  Gaming  management  staff,  your 
relationship  to  the  Department  of  the  Interior  or  other  Federal  De- 
partments with  respect  to  law  enforcement,  as  to  your  ability  to 
oversee  the  gaming  operations? 

I  am  not  speaking  in  the  context  of  law  enforcement,  criminal  ac- 
tivity and  penetration  of  gaming  activities, 

Ms.  McKeag.  I  believe  our  chairman,  Tony  Hope,  has  a  state- 
ment which  addresses  the  Commission's  responsibilities  in  the  area 
of  enforcement.  I  think  he  would  like  to  summarize  that  statement, 
and  then  we  could  discuss 

Mr.  Abercrombie.  Oh,  I'm  soriy. 

Mr.  Hope,  I  didn't  see  your  sign  there,  I  beg  your  pardon.  The 
transcriber  was  in  the  way.  I  didn't  recognize  that  you  were  there. 
I  beg  your  pardon. 

Did  you  hear  my  question  to  the  other  commissioner? 

Mr.  Hope.  Yes,  I  did. 

Mr.  Abercrombie.  Would  you  care  to  comment?  My  question  has 
to  do  with  your  observations  or  commentary  with  respect  to  the 
ability  of  existing  institutions  under  the  existing  law  to  deal  with 
the  penetration  of  Indian  gaming  by  organized  crime  elements. 

STATEMENT  OF  HON.  ANTHONY  J.  HOPE 

Mr.  Hope.  Yes,  I  would  like  to  address  that  question,  but  would 
you  like  my  prepared  remarks  first? 

Mr.  Abercrombie.  No.  We  will  get  to  that. 

Mr.  Hope.  The  question  has  been  raised  as  to  how  many  people 
are  available  for  the  enforcement  of  Indian  gaming  as  compared  to, 
say  New  Jersey.  Grenerally,  New  Jersey  has  905  people.  They  have 
adopted  a  particular  system  of  gaming  enforcement  which  includes 
regulating  paper  napkins  in  the  bars  and  includes  personnel  whose 
job  it  is  to  go  around  and  count  the  number  of  bar  stools  to  make 
sure  that  they  conform  to  the  square  foot  area  of  the  casinos  in 
terms  of  permissible  numbers  of  bar  stools. 

We  do  not  feel  that  that  is  the  regulatory  scheme  that  Indian 
gaming  needs  or  that  should  be  followed.  We  prefer  the  Nevada 


282 

concept  more  as  embodied  in  the  Act  which  essentially  provides 
that  the  tribes,  as  owners,  are  the  primary  regulators  in  Class  II 
gaming  and  work  with  the  States  to  determine  jurisdiction  in  Class 

II  gaming. 

As  backup,  in  terms  of  enforcement  or  regulation,  we  have  avail- 
able approximately  10,000  people  to  regulate  gaming  nationwide. 
We  have  87  U.S.  attorneys  and  their  forces.  We  have  all  of  the  FBI 
that  we  need.  We  have  the  State  groups  in  those  18  States  with 
compacts  which  are  generally  run  out  of  their  attorney  generals'  of- 
fice. We  have  those  staffs  available.  We  have  different  staffs  that 
do  background  investigations. 

Within  my  own  Department,  we  have  very  few  people.  As  here 
before  you,  you  see  myself,  Commissioner  McKeag;  Commissioner 
Joel  Frank;  and  my  General  Counsel,  Michael  Cox. 

We  have  a  total  of  27  people,  but  we  have  the  ability  and  the  au- 
thority to  farm  out  to  the  private  sector  or  to  tribes  or  to  other  Fed- 
eral agencies  and  to  hire  for  anything  that  we  need  done.  There  is 
a  vast  array  of  people  available  for  regulation. 

The  regulatory  responsibilities  are  divided  into  two  groups.  Class 

III  and  Class  II.  We  fully  recognize  that  casinos  need  a  greater 
amount  of  regulation  than  do  bingo  halls.  My  personnel  have  the 
responsibility  for  the  oversight  of  the  day-to-day  operation  of  the 
bingo  halls.  These  are  places  where  it  would  be  very  difficult  to 
launder  money.  A  $10,000  transaction  would  buy  you  a  whole  stack 
of  bingo  pads  but  they  couldn't  be  converted  back  into  money. 

The  casinos  are  regulated  under  a  tribal-State  compact  where 
the  State,  contrary  to  what  I  have  heard  in  prior  panels,  has  the 
right  to  negotiate  for  reimbursement  of  any  expenses  that  are  going 
to  be  incurred  for  regulation  of  these  casinos.  They  can  get  the 
money  back  through  the  compact  process  from  the  tribes.  They  can 
insist  on  all  reasonable  regulatory  requirements.  The  Commission 
performs  background  investigations  on  people  going  into  Class  II 
insofar  as  they  are  owners  of  management  contracts.  As  such,  we 
have  our  own  screening  processes,  some  of  which  carries  over  into 
Class  III,  because  a  lot  of  the  Class  III  contracts  have  Class  II  ele- 
ments within  them  and  so  will  be  conducting 

Mr.  Abercrombie.  Commissioner  Hope,  many  people  who  are  as- 
sociated with  the  law  and  the  passage  of  the  law  understand  the 
differences  between  Class  I,  Class  II,  and  Class  III,  but  for  pur- 
poses of  clarification  and  the  record,  would  you  differentiate  the 
three  classes?  I  know  you  do  that  in  your  testimony. 

Why  don't  we  just  have  your  testimony  submitted  for  the  record, 
and  you  can  concentrate  just  on  the  final  page  of  conclusions  and 
the  differentiation  in  the  classes. 

Mr.  Hope.  Please,  if  you  would  submit  for  the  record.  Thank  you. 

[Prepared  statement  of  Mr.  Hope  follows:] 


283 


TESTIMONY  OF 

ANTHONY  J.  HOPE 

CHAIRMAN,   NATIONAL  INDIAN  GAMING  COMMISSION 

BEFORE 

THE  HOUSE  COMMITTEE  ON  NATURAL  RESOURCES 
SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

OCTOBER  5,  199  3 


Mr.  Chairman,  Members  of  the  Committee,  thank  you  for  the 
opportunity  to  appear  before  you  today.  My  name  is  Tony  Hope.  I 
am  the  Chairman  of  the  National  Indian  Gaming  Commission.  With  me 
today  are  Commissioner  Jana  McKeag  of  the  Cherokee  Nation  of 
Oklahoma,  Commissioner  Joel  M.  Frank,  Sr.  of  the  Seminole  Tribe  of 
Florida  and  General  Counsel  Michael  D.  Cox. 

The  Indian  Gaming  Regulatory  Act  of  1988  (IGRA)  was  enacted  as 
a  response  to  the  proliferation  of  tribal  gaming  establishments  in 
Indian  country  operating  without  regulatory  oversight  by  either  the 
federal  government  or  the  states.  The  IGRA  provides  a  regulatory 
framework  for  regulating  Indian  gaming  by  dividing  gaming  into 
three  (3)  classes,  establishing  the  National  Indian  Gaming 
Commission  to  oversee  the  regulation  of  class  II  gaming,  and 
authorizing  Indian  tribes  and  states  to  enter  into  compacts  for  the 
regulation  of  class  III  gaming. 

Class  I  gaming  (social  games  or  traditional  tribal  games 
played  in  connections  with  tribal  ceremonies)  is  regulated  under 
the  exclusive  jurisdiction  of  the  tribes.  Class  II  gaming  (bingo, 
pull-tabs  and  related  games)  is  regulated  by  the  tribes,  but  with 
oversight  by  the  National  Indian  Gaming  Commission.  Class  III 
gaming  (all  other  gaming,  including  horse  racing,  blackjack, 
roulette,  slot  machines,  lotteries  and  craps)  is  regulated  under 
the  terms  of  a  compact  between  the  tribe  and  the  state. 

The  Commission  is  an  independent  regulatory  agency 
administratively  located  within  the  Department  of  the  Interior. 
Under  the  IGRA,  the  Commission's  primary  role  is  to  monitor  and 
oversee  the  regulation  of  class  II  gaming  operations.  The 
Commission  also  approves  class  II  and  class  III  tribal  gaming 
ordinances  and  management  contracts.  It  has  the  authority  to 
impose  civil  penalties  or  to  close  a  gaming  establishment  for 
substantial  violations  of  the  IGRA,  the  regulations  promulgated  by 
the  Commission,  or  tribal  gaming  ordinances. 


284 


Under  the  IGRA,  the  day-to-day  regulation  of  class  II  gaming 
is  primarily  the  responsibility  of  the  tribe,  while  the  day-to-day 
regulation  of  class  III  gaming  is  as  negotiated  and  set  forth  in 
the  compact  between  the  tribe  and  the  state. 

Although  law  enforcement  is  a  vital  tool  in  the  regulatory 
process,  the  regulatory  structure  of  the  IGRA  divides  enforcement 
among  several  different  entities.  For  example,  the  U.  S.  Attorneys 
are  charged  with  enforcement  of  the  Johnson  Act  (15  U.S.C.  §1175), 
theft  from  Indian  gaming  establishments  (18  U.S.C.  §1167  and  1168) 
and  state  gambling  laws  in  the  absence  of  a  tribal-state  compact 
(18  U.S.C.  §1166);  the  FBI  is  charged  with  investigating  crimes  on 
Indian  reservations;  the  tribes  and  the  states  can  agree  that  the 
states  and/or  the  tribes  will  investigate  and  prosecute  crimes 
involving  class  III  gaming.  Fraud  could  be  under  the  jurisdiction 
of  the  federal,  state  and  tribal  governments. 

The  Commission  has  civil  enforcement  authority  for  violations 
of  the  IGRA,  tribal  ordinances,  management  contracts,  and 
Commission  regulations.  Additionally,  it  conducts  background 
investigations  on  entities  and  individuals  with  a  financial 
interest  in,  or  management  responsibility  for  class  II  management 
contracts,  but  not  for  class  III  management  contracts. 

We  have  in  the  past  and  will  continue  to  work  with  the  FBI, 
the  IRS,  the  U.S.  Attorneys,  and  others  to  develop  and  improve 
procedures  for  information  sharing,  the  conduct  of  background 
investigations,  and  the  coordination  of  enforcement  procedures.  As 
regulators,  we  meet  regularly  with  individuals  and  organizations  to 
discuss  our  respective  roles  and  responsibilities  in  Indian  gaming. 
These  include  the  numerous  gaming  tribes  and  associations,  as  well 
as  the  Conference  of  Western  Attorneys  General,  the  National 
Association  of  Attorneys  General,  the  National  Governor's 
Association,  the  Attorney  General's  Advisory  Committee  on  Indian 
Affairs,  and  the  Indian  Section  of  the  American  Bar  Association. 

The  Commission  is  charged  with  approving  all  class  II  and 
class  III  management  contracts,  and  with  determining  the 
suitability  of  owners  of  management  contracts  for  all  class  II 
gaming  operations.  Some  of  these  background  investigations  will  be 
done  quite  rapidly  while  others  may  take  six  months  or  more  to 
complete.  Determinations  of  unsuitability  and  the  consequent 
banning  of  individuals  from  significant  roles  in  Indian  gaming  is 
perhaps  the  most  important  "law  enforcement"  role  of  the 
Commission.  These  determinations  include  such  investigative 
procedures  as: 

o  Verifying  the  information  submitted  by  the  applicant  by 
written  or  oral  communications. 


285 


o  Inquiring  into  the  applicant's  prior  activities,  criminal 
record,  if  any,  and  reputation,  habits  and  associations; 
conducting  interviews  with  knowledgeable  people  familiar  with 
the  applicant  such  as  former  employers,  personal  references, 
business  associates,  and  others. 

o  Documenting  the  disposition  of  all  potential  problem  areas 
noted  and  disqualifying  information  obtained. 

The  Chairman  may  approve  a  management  contract  only  if,  among 
other  things,  it  meets  the  standards  of  part  531  and  §533.3  of  the 
Commission's  regulations.  However,  the  Chairman  shall  disapprove 
a  management  contract  for  class  II  gaming  if  he  or  she  determines 
that  — 

o  any  person  with  a  direct  or  indirect  financial  interest  in,  or 
having  management  responsibility  for,  a  management  contract: 

is  an  elected  member  of  the  governing  body  of  the  tribe 
that  is  party  to  the  management  contract; 

has  been  convicted  of  any  felony  or  any  misdemeanor 
gaming  offense; 

has  knowingly  and  willfully  provided  materially  false 
statements  or  information  to  the  Commission  or  to  a 
tribe; 

has  refused  to  respond  to  questions  asked  by  the  Chairman 
in  accordance  with  his  responsibilities  under  this  part; 
or 

is  determined  by  the  Chairman  to  be  a  person  whose  prior 
activities,  criminal  record,  if  any,  or  reputation, 
habits,  and  associations  pose  a  threat  to  the  public 
interest  or  to  the  effective  regulation  and  control  of 
gaming,  or  create  or  enhance  the  dangers  of  unsuitable, 
unfair,  or  illegal  practices,  methods,  and  activities  in 
the  conduct  of  gaming  or  the  carrying  on  of  related 
business  and  financial  arrangements; 

o  The  management  contractor  or  its  agents  have  unduly  interfered 
with  or  influenced  for  advantage,  or  have  tried  to  unduly 
interfere  with  or  influence  for  advantage,  any  decision  or 
process  of  tribal  government  relating  to  the  gaming  operation; 
or 

o  The  management  contractor  or  its  agents  has  deliberately  or 
substantially  failed  to  follow  the  terms  of  the  management 
contract  or  the  tribal  gaming  ordinance  or  resolution  adopted 
and  approved  pursuant  to  this  Act;  or 


84-760  O  -  94  -  1  n 


286 


o  A  trustee,  exercising  the  skill  and  diligence  to  which  a 
trustee  is  commonly  held,  would  not  approve  the  contract. 

The  Chairman  may  disapprove  a  management  contract  for  class  III 
gaming  if  he  or  she  determines  that  a  person  with  a  financial 
interest  in,  or  management  responsibility  for,  a  management 
contract  is  a  person  whose  prior  activities,  criminal  record,  if 
any,  or  reputation,  habits,  and  associations  pose  a  threat  to  the 
public  interest  or  to  the  effective  regulation  and  control  of 
gaming,  or  create  or  enhance  the  dangers  of  unsuitable,  unfair,  or 
illegal  practices,  methods,  and  activities  in  the  conduct  of  gaming 
or  the  carrying  on  of  related  business  and  financial  arrangements. 

On  February  22  of  this  year  regulations  covering  the  review 
and  approval  of  tribal  gaming  ordinances  and  management  contracts 
and  compliance  and  enforcement  procedures  took  effect.  This  has 
allowed  the  Commission  to  begin  the  operational  phase  of  its  work. 
Among  other  things,  the  Commission  is  in  the  process  of  initiating 
civil  enforcement  actions.  However,  it  would  be  inappropriate  for 
me  to  identify  particular  targets. 

During  this  period  the  Commission  has: 

hired  and  trained  six  field  representatives; 

entered  into  a  Memorandum  of  Understanding  with  the  FBI 

concerning  criminal  records  checks; 

made  site  visits  to  substantially  all  gaming  tribes  and 

tribal  gaming  operations  to  — 

inform  them  of  the  regulatory  requirements  to  which 

they  are  now  subject,  and 
-  gather  information  needed  by  the  Commission  for 

regulatory  purposes; 
hired  financial  analysts; 

processed  hundreds  of  fingerprint  cards  for  the  tribes 
pursuant  to  a  new  FBI  policy  statement; 
begun  reviewing  and  approving  — 

tribal  gaming  ordinances,  and 

management  contracts; 
-   begun  conducting  background  investigations; 

developed  and  issued  guidance  to  the  tribes  in  the  form 
of  Tribal  Bulletins  (copies  being  furnished  for  the 
record) ;  and 
developed  a  model  gaming  ordinance  for  the  tribes. 

It  is  the  stated  policy  of  the  Commission  to  work  with  the 
tribes  to  obtain  compliance  with  the  IGRA,  the  Commission's 
regulations,  and  the  tribal  ordinances.  We  believe  that  this 
approach  is  in  the  best  long  term  economic  interest  of  the  tribes, 
and  vital  to  achievement  of  tribal  self-sufficiency.  We  will  be 
happy  to  answer  any  questions. 

Thank  you. 


287 


NATIONAL  INDIAN  GAMING  COMMISSION 
BULLETIN 


No.  93-2  June  22,  1993 


Subject:    Procedures  for  Processing  Fingerprint  Cards 


The  National  Indian  Gaming  Commission  (NIGC)  is  currently  implementing  procedures  to 
process  fingerprint  cards  submitted  by  tribes  as  part  of  their  employee  background 
investigations.    This  bulletin  is  intended  to  provide  you  witli  information  concerning  the  steps 
to  be  followed  to  ensure  the  prompt  processing  of  all  submitted  fingerprint  cards. 


Under  the  NIGC's  ordinance  regulations,  prior  to  the  issuance  of  a  license,  a  tribe  is 
required  to  perform  a  fingerprint  check,  through  the  FBI  records  system,  as  part  of  the 
background  investigation  on  each  individual  who  has  applied  for  a  position  as  a  key 
employee  or  primary  management  official  in  its  .aming  opcration[s].    The  information 
obtained  as  a  result  of  this  fingerprint  check  will  assist  the  tribe  in  determining  the 
applicant's  suitability  for  employment. 


The  FBI  has  recently  issued  a  policy  statement  concerning  access  to  criminal  history  record 
information  (CHRI)  by  the  NIGC,  slate  agencies  and  tribal  governments.   A  copy  of  this 
policy  statement  is  enclosed  for  your  information.    As  you  will  note,  under  this  policy  the 
NIGC  is  authorized  to  process  fingerprint  cards  and  issue  copies  of  the  reports  of  the 
fingerprint  checks  directly  to  the  requesting  tribes.    Because  of  the  highly  sensitive  nature  of 
the  reports,  the  FBI  has  required  the  NIGC  to  take  steps  to  ensure  that  there  is  no  improper 
dissemination  of  CHRI,  that  liie  information  is  used  only  for  authorized  purposes,  and  that 
the  CHRI  is  securely  maintained. 


In  order  to  ensure  compliance  with  these  FBI  requirements,  it  is  necessary  for  each  tribe 
receiving  CHRI  to  execute  the  enclosed  Memorandum  of  Understanding  (MOU).   The  MOU 
also  places  certain  restrictions  on  the  use  of  CHRI  in  administrative  and  judicial  proceedings, 
reserves  NIGC's  right  to  furnish  the  tribe  CHRI  in  the  form  of  summary  memoranda, 
restricts  the  availability  of  NIGC  employees  to  testify  relative  to  CHRI,  reserves  NIGC's 
right  to  discontinue  providing  CHRI  where  a  tribe  has  failed  to  comply  with  the  terms  of  the 
MOU,  and  acknowledges  the  FBI's  rigiit  to  impose  additional  restrictions  on  the  release  of 
CHRI. 


288 


FBI  policy  also  authorizes  CHRI  access  by  state  regulatory  agencies  and  tribal  governments 
under  certain  specified  conditions  (jeg  Policy  Statement  at  pages  4-5).   Tribes  should 
determine  if  the  conditions  exist  which  would  permit  them  to  process  fingerprint  cards 
directly  or  through  a  sUte  agency.   Where  the  qualifying  conditions  have  been  met,  the  tribe 
may  elect  to  use  such  agencies  to  process  its  fingerprint  cards.    It  should  be  noted,  however, 
that  under  current  FBI  policy,  such  requests  will  not  routinely  be  processed  through  Bureau 
of  Indian  Affairs  (BIA)  law  enforcement  offices.  The  language  contained  in  the  Preamble  to 
the  NIGC's  final  ordinance  regulations  indicating  that  the  BIA  is  available  for  such  purposes 
is  inaccurate  and  shpuld  be  disregarded.    BIA  law  enforcement  offices  may,  however, 
continue  to  take  the  fingerprints  of  applicants  for  key  employee  and  primary  management 
official  positions  and  forward  the  subject  fingerprint  cards  to  the  NIGC  for  processing. 


Set  forth  below  are  the  steps  to  be  followed  whenever  a  tribe  elects  to  use  the  NIGC  to 
process  the  fingerprints  cards  of  applicants  for  employment  in  its  gaming  operations: 

1.  A  duly  authorized  official  of  the  tribe  should  execute  the  enclosed  MOU  and  return  it  to 
the  NIGC  at  the  earliest  possible  date.    No  copies  of  criminal  history  reports  will  be 
forwarded  to  a  tribe  until  the  NIGC  has  received  a  properly  executed  MOU. 

2.  The  tribe  should  notify  the  NIGC  which  law  enforcement  agency/office(s)  will  be 
taking  the  fingerprints  for  the  tribe  and  designate  a  contact  person  at  the  identified 
agency/of fice(s).   In  addition,  the  tribe  should  indicate  the  number  of  cards  which  the  NIGC 
should  send  to  this  agency/office  making  allowances  for  lost  or  damaged  cards.   The 
forwarded  cards  will  refiect  the  Originating  Agency  Identifier  (ORI)  number  assigned  to  the 
NIGC  by  the  FBI. 

3.  The  tribe  should  provide  NIGC  with  a  list  of  individuals  whose  fingerprint  cards  the 
NIGC  will  be  receiving  from  the  law  enforcement  agency/office  and  a  check  to  the  National 
Indian  Gaming  Commission  to  cover  the  cost  of  processing  those  cards  (number  of  cards  X 
$35.00).  The  list  should  also  contain  the  social  security  number  and  date  of  birth  of  each 
listed  individual  and  the  name  of  tlie  law  enforcement  agency/office  taking  the  fingerprints. 
The  $35.00  per  card  charge  for  processing  consists  of  a  $17.00  fee  charged  by  the  FBI  and 
$18.00  to  cover  NIGC's  costs,  including  personnel,  postage  and  telephone. 

4.  Once  fingerprints  have  been  taken,  the  agency  taking  the  prints  should  forward  the 
completed  cards  directly  to  the  NIGC.   The  NIGC  will  process  only  those  cards  received 
directly  from  a  law  enforcement  agency. 


289 


5.     Once  the  NIGC  receives:  I)  the  completed  fingerprint  card:  2)  the  required  list  of  the 
individuals  whose  fingerprint  cards  the  NIGC  will  be  receiving  and  3^  a  check  to  cover  costs. 
it  will  forward  the  fingerprint  cards  to  the  FBI  for  processing.   The  FBI  is  currently 
averaging  21  working  days  to  process  a  fingerprint  card. 


6.  Upon  completion  of  the  fingerprint  check,  the  FBI  will  forward  a  report  of  the  findings 
to  the  NIGC.    Subject  to  compliance  with  the  conditions  set  fortli  in  the  enclosed 
Memorandum  of  Understanding  (MOU),  NIGC  will  forward  a  copy  of  this  report  to  the 
submitting  tribe  to  be  used  in  determining  of  the  suitability  of  Uie  applicant  for  employment 
in  the  tribe's  gaming  operation. 

7.  The  NIGC  will  retain  the  original  reports  and  the  processed  fingerprint  cards  and  will 
incorporate  them  into  the  Indian  Gaming  Individual  Records  System.   This  system  will  be 
subject  to  the  Commission's  Privacy  Act  Procedures,    see  25  CFR  Sections  515.1-12  (58  FR 
5814-5818,  January  22,  1993). 


NIGC  regulations  require  a  tribe  to  perform  a  background  check  on  applicants  for  key 
employee  or  management  official  positions  following  approval  of  a  tribal  ordinance  by  the 
Chairman.    In  order  to  facilitate  the  prompt  distribution  of  CHRI,  however,  the  NIGC  will 
process  fingerprint  card  submissions  which  meet  the  requirements  of  Paragraph  5  prior  the 
approval  of  a  gaming  ordinance. 


It  is  important  to  note,  however,  that  until  such  time  a  tribe's  gaming  ordinance  has  been 
approved  by  the  Chairman,  the  procedures  for  forwarding  employee  applications  and 
investigative  reports  set  forth  in  Sections  558.3  and  558.4   cannot  be  initiated  by  tlie  tribe 
and  the  time  periods  contained  in  those  provisions  do  not  begin  to  run.   It  should  be  further 
noted  that  if  the  tribe  is  conducting  a  background  investigation  consistent  with  the 
requirements  of  Part  556,  the  CHRI  constitutes  only  one  of  a  number  of  sources  of 
information  which  the  tribe  must  consider  in  making  eligibility' determinations  for 
employment  in  its  gaming  operation. 


These  procedures  are  effective  immediately. 

For  additional  information  contact  Fingerprint  Processing  at  (202)  632-7003. 


290 


EBI  POLICY  ON  INDIAN  GAMING  REGULATORY  ACT  SUBMISSIONS  BY  THE 
NATIONAL  INDIAN  GAMING  COMMISSION  (NIGC),  STATE 
IDENTIFICATION  BUREAUS,  AND  TRIBAL  GOVERNMENTS 

Pursuant  to  the  Indian  Gaming  Regulatory  Act  (codified 
at  Title  25,  United  States  Code,  Section  2701  et.seq. ) .  the  NIGC 
promulgated  regulations  defining  various  NIGC  gaming 
responsibilities  (25  Code  of  Federal  Regulations,  Part  501 
et.seq. ,  published  January  22,  1993  in  the  Federal  Register) . 
NIGC  contacted  the  Access  Integrity  Unit  (AIU),  Audit  Section, 
Criminal  Justice  Information  Services  Division  (CJIS),  and  the 
Identification  Division  (ID),  with  respect  to  access  to  FBI 
criminal  history  record  information  under  the  Act  and  NIGC 

regulations.   AIU  has  also  been  contacted  by  several  state 

Identification  bureaus  on  the  same  subject.   This  statement  of 
policy,  intended  for  distribution  to  the  NIGC,  Indian  tribal 
governments,  and  state  bureaus,  sets  out  FBI  policy  and 
procedures  with  respect  to  requests  for  access  to  FBI  criminal 
liistory  records  under  the  Act,  the  NIGC  regulations,  state/tribal 
compacts,  and  state  law. 

1 )   Requests  from  the  NIGC  - 

The  Indian  Gaming  Regulatory  Act  does  not  specifically 
authorize  NIGC  access  to  FBI  criminal  history  record  Information 
(CHRI)  for  baclcground  screening  purposes.   Section  2708  of  Title 
25  of  the  United  States  Code  (U.S.C. ) (which  is  part  of  the  Indian 
Gaming  Regulatory  Act,  as  codified)  reads  as  follows: 

"The  Commission  may  secure  from  any  department' 
or  agency  of  the  United  States  information 
necessary  to  carry  out  this  Act.   Upon  the 
request  of  the  Chairman,  the  head  of  such 
department  or  agency  shall  furnish  such 
information  to  the  Commission,  unless  otherwise 
prohibited  by  law." 

We  believe  that  Section  2708  itself  provides  sufficient  basis  for 
providing  FBI  CHRI  to  NIGC  "unless  otherwise  prohibited  by  law." 
The  Menard  case  effectively  prohibited  dissemination  of  CHRI  to 
state  and  local  agencies  for  licensing  and  employment  purposes. 
Menard  did  not  impose  a  similar  prohibition  on  dissemination  of 
CHRI  to  Federal  agencies.   28  C.F.R.,  Section  20.33  explicitly 
•authorizes  dissemination  to  Federal  agencies  authorized  by 
Federal  statute  or  executive  order.   It  is  our  opinion  that 
Section  2708  authorizes  direct  dissemination  of  CHRI  to  NIGC  for, 
under  the  standard  established  by  28  U.S.C,  Section  534,  its 
"official  use. " 


291 


The  extent  to  which  "official  use"  encompasses  access 
to  CHRI  by  NIGC  is  determined  by  NIGC's  duties  as  defined  by  the 
Act.   NIGC  has  direct  authority  to  approve  management  contracts 
for  both  Class  II  (bingo  and  related  activities)  and  Class  III 
(casino-type  operations)  activities.  25  U.S.C.,  Section 
2705(a)(4).   The  nature  of  the  bac)cground  screening  to  be 
undertaken,  at  least  as  to  Class  II  management  contracts  and 
particular  persons  stated  therein,  is  defined  by  Section  2711 
(a)(1)  and  (e).   Clearly  Class  II  management  contract  approvals 
require  criminal  history  screening  of  persons  intimately 
connected  to  the  management  contractor  (such  as  directors  of  a 
corporate  contractor).   Submissions  to  the  FBI  by  NIGC  for  this 
purpose  are  authorized. 

NIGC'S  responsibility  with  respect  to  approval  of  Class 
III  management  contracts  does  not  appear  to  include  screening 
based  on  criminal  history  information.   Authority  for  Class -III 
screening  is  found  in  Section  2710(d)(9),  which  specifically 
excludes  the  reviews  in  Section  2711(a)  and  (e),  which  establish 
criminal  history  record  screening.   NIGC's  own  Interpretation  in 
its  commentary  to  25  C.F.R.,  Parts  531,  533,  535,  537,  and  539  is 
consistent  with  this  interpretation,  insofar  as  this  exclusion 
assigns  responsibility  to  the  tribes  for  performance  of 
preapproval  criminal  history  screening.   NIGC's  regulations  (and 
commentary),  however,  express  its  determination,  under  NIGC's 
general  authority  to  protect  tribes  from  organized  crime  and 
corrupting  influences,  to  disapprove  or  revoke  management 
contracts,  including  Class  III  contracts,  if  management  personnel 
have  disqualifying  criminal  records.  See  25  C.F.R.,  Sections 
533.6  and  533.1.   This  interpretation  is  entirely  consistent  with 
the  purposes  of  the  Act,  and  therefore,  submissions  by  NIGC 
relating  to  approval,  disapproval,  or  revocation  of  Class  III 
management  contracts  will  also  be  accepted  and  processed  by  the 
FBI. 

NIGC,  in  its  regulations,  also  asserts  authority  to 
conduct  background  screening  of  primary  management  officials  and 
key  employees  for  gaming  conducted  by  tribes  without  third-party 
management  contracts.   Under  Section  2710(c)(1)  and  (2),  NIGC  is 
authorized  to  consult  with  law  enforcement  officials  concerning 
Class  II  gaming  licenses  issued  by  a  tribe,  and  to  facilitate 
license  suspension  if  "primary  management  official(s)  or  key 
employee(s)"  fails  to  meet  standards  set  out  in  Section 
2710(b) (2) (F) (ii) (II) .   That  subparagraph  provides  for 
disqualification  of  primary  management  officials  or  key  employees 
for,  among  other  reasons,  "criminal  record .. .pose(s)  a  threat  to 
the  public  interest  or  to  the  effective  regulation  of  gaming." 
Based  on  the  combination  of  these  provisions,  NIGC's  official  use 
of  CHRI  extends  to  background  screening  of  Class  II  primary 
management  officials  and  key  employees. 


292 


NIGC's  authority  as  to  Class  III  primary  management 
officials  and  key  employees  is  less  clear,  but  in  our  view,  valid 
nonetheless.   Parts  556  and  558  of  the  NIGC  regulations  assert 
this  authority  unless  a  tribal-state  compact  has  allocated  this 
responsibility  exclusively  to  the  state  or  state  agencies.   As 
the  agency  charged  with  effectuation  of  the  IGRA,  NIGC's 
Interpretation  of  its  provisions  must  be  viewed  as  authoritative. 
As  such,  NIGC  fingerprint  submissions  for  Class  III  primary 
management  officials  and  key  employees,  absent  a  preemptive 
tribal-state  compact,  are  within  NIGC's  "official  use"  and  will 
be  processed  by  the  FBI. 

Our  review  of  the  Act  reveals  no  explicit  authority  for 
direct  access  to  FBI  CHRI  by  Indian  tribal  governments.   As 
previously  stated.  Section  2708  does  not  constitute,  in  our  view, 
such  an  authorization  because  of  the  ending  phrase  "unless 
otherwise  prohibited  by  law."   The  Menard  case  is  such  a  -.  - 
prohibition.   This  prohibition  is  now  set  out  in  28  C.F.R. , 
Section  20.33.   The  only  exception  by  which  state  and  local 
agencies  may  access  FBI  CHRI  is  through  state  enactment  of  Pub.L. 
92-544  statutes  or  an  express  Federal  statute.   As  stated. 
Section  2708  by  its  own  terms  is  not  such  a  Federal  statute. 

We  also  do  not  believe  that  language  in  the  Act 
requiring  criminal  background  checks  or  defining  eligibility  in 
relation  to  the  existence  or  nonexistence  of  criminal  records 
constitutes  such  an  express  Federal  statute.   Our  longstanding 
policy  has  been  that  Congress  must  clearly  define  an  exception  to 
the  Menard  prohibition  authorizing  access  to  CHRI  for  non-Federal 
licensing  purposes.   The  FBI  has  never  recognized  such  an 
exception  solely  from  language  indicating  that  background 
screening  should  be  undertaken,  nor  from  language  indicating  that 
some  form  of  criminal  record  is  a  disqualification  from  licensing 
or  employment.   We  have  reviewed  the  statutory  history  of  the  Act 
and  can  find  no  indication  that  Congress  intended  for  tribal 
governments  to  access  FBI  CHRI.   In  fact,  we  believe  Section  2708 
.to  state  the  contrary  intent. 

Access  by  the  tribes  may  be  claimed  based  on  Section 
2710(c)(3)  and  (4)  of  the  Act.   Under  that  Section,  NIGC  may 
issue  a  certificate  of  self  regulation  to  a  tribe  operating  Class 
II  games,  based  on,  inter  alia,  the  implementation  of  an  adequate 
system  for  " investigation ...  of  all  employees."   Perhaps  more 
importantly,  NIGC  must  review  tribal  ordinances  authorizing  Class 
II  gaming  to  ensure,  inter  alia,  that  the  ordinance  ensures  that 
background  investigations  are  conducted  in  primary  management 
officials  and  key  employees.  Section  2710 ( b) 2 ) (F) .   This 
ordinance  must  also  establish  a  standard  for  disqualification  of 
such  officials  or  key  employees,  which  includes  "criminal  record" 
which  would  "pose  a  threat  to  the  public  interests  or  to  the 
effective  regulation  of  gaming."  Section  2710 ( b) ( 2 ) ( F) ( ii ) ( II ) . 


293 


These  provisions  discussed  are  not  similar  to  nor  do 
they  approach  the  explicitness  of  previous  Federally  legislated 
authorizations  for  non-Federal  agency  access  to  CHRI.   See  for 
example  15  U.S.C.,  Section  78q  ("Notwithstanding  any  other 
provision  of  law,  in  providing  identification  and  processing 
functions,  the  Attorney  General  shall  provide  the  Commission  and 
self-regulatory  organizations  designated  by  the  Commission  with 
access  to  all  criminal  history  record  information.").   An 
assertion  by  a  tribe  of  direct  access  to  FBI  CHRI  under  these 
provisions  would  be,  in  our  view,  erroneous. 

Secondary  dissemination  of  CHRI  by  NIGC  is  controlled  by 
28  C.F.R.,  Section  20.33(b)  and  28  U.S.C,  Section  534(b).   Both 
provisions  authorize  sanctions  for  secondary  dissemination 
outside  the  receiving  department  or  "related  agencies."  A 
related  agency  logically  could  be  a  tribal  government  or 

subdivision  thereof  which  is  participating  with  NIGC  in   

background  screening  or  activity  related  to  official  NIGC  use  of 
CHRI  as  described  above.   The  requirement  of  Section  534(a)  that 
the  related  agency  must  be  a  "governmental  agency"  must  also  be 
met,  so  that  secondary  dissemination  of  CHRI  to  a  tribal 
government  could  only  occur  to  a  tribe  recognized  by  the  U.S.  or 
•a  state  as  a  valid  tribal  government. 

The  FBI  has  traditionally  defined  the  boundaries  of 
authority  for  access  to  CHRI  ( in  the  absence  of  a  more 
authoritative  definition,  such  as  by  the  Courts),  and  then  allows 
the  accessing  agency  to  screen  its  requests  to  ensure  those 
boundaries  are  respected.   NIGC  will  be  provided  with  an 
Originating  Agency  Identifier  (ORI)  to  allow  for  proper 
submissions  under  its  authority  and  should  be  informed  of  the 
extent  of  that  authority.   Thereafter,  submissions  would  not  be 
reviewed  by  the  FBI  for  compliance,  except  to  the  extent  that  any 
future  audit  program  will  review  submissions  and  dissemination 
logs. 

2)   Requests  from  State  Regulatory  Agencies  - 

Responsibility  for  regulation  of  Class  III  gaming  is 
joint  between  states  and  tribes.   There  is  no  language  in  the  Act 
authorizing  states  or  tribes  to  receive  FBI  criminal  history  for 
baclcground  screening,  and  as  discussed.  Section  2708  does  not 
authorize  access  to  CHRI  by  the  tribes  or  state  agencies.   For 
this  reason  Pub.L.  92-544  can  be  the  only  avenue  by  which 
authorization  can  be  established  for  access  to  FBI  CHRI.   If  a 
state  enacts  or  has  enacted  a  law  pursuant  to  Pub.L.  92-544  for 
bacJcground  screening  for  gambling  purposes  and  a  state  agency 
designated  thereunder  has  assumed  responsibility  for  Indian 
gaming  (by  state- tribal  compact,  for  example),  access  to  FBI  CHRI 
is  authorized. 


294 


Note  that  the  existence  of  a  tribal-state  compact 
alpne  does  not  authorize  access  to  FBI  records.   Pub.L.  92-544 
requires  a  state  "statute."   Our  interpretation,  supported  by  OLC 
opinions,  is  that  any  law  authorizing  access  under  Pub.L.  92-544 
must  be  legislatively  enacted  (or  the  equivalent  to  legislative 
enactment).   A  state  executive  order  or  administrative 
regulations  cannot  create  a  Pub.L.  92-544  authorization.   The 
compact  we  have  previously  reviewed,  between  the  State  of 
Connecticut  and  the  Mashantucket  Tribe  has  been  legislatively 
recognized  and  is,  therefore,  a  "state  statute"  under  Pub.L. 
92-544.   Submissions  will  be  accepted  thereunder  by  the  terms 
created  in  that  Compact. 

Secondary  dissemination  to  tribal  governments  would  be 
permissible  under  the  same  conditions  specified  in  section  one 
(1)  above.   Such  dissemination  could  occur  to  a  lawfully 
recognized  tribal  government  which  is  assisting  the  designated 
state  agency  with  a  background  investigation  and  therefore  has 
need  for  such  information. 

3)   Requests  from  Tribal  governments  - 

As  previously  stated,  the  Act  contains  no  language 
purporting  to  authorize  access  to  FBI  records  by  tribal 
governments  and  therefore,  Pub.L.  92-544  is  the  only  avenue  for 
such  access.   Pub.L.  92-544  authorizes  such  exchanges  with  state 
and  local  governments'  for  noncriminal  justice  purposes  pursuant 
to  a  state  statute.   We  believe  that  a  recognized  tribal 
government  can  be  an  eligible  governmental  entity  under  Pub.L. 
92-544,  and  therefore,  can  receive  FBI  records  directly  if 
authorized  by  state  statute  (approved  by  AIU).   A  tribal 
ordinance  could  not  effect  that  authorization.   A  tribal-state 
compact,  as  previously  discussed,  can  effect  such  authorization 
only  if  enacted  (or  the  equivalent  thereof)  by  a  state 
legislature. 

No  secondary  dissemination  would  be  permitted  outside 
the  tribal  government  in  any  case,  except  to  governmental 
agencies  assisting  in  any  authorized  background  screening 
activity. 

As  to  both  state  and  tribal  requests,  our  mission  will 
be  to  review  and  approve  the  authorization  requests  by  reviewing 
statutes  submitted  under  Pub.L.  92-544  and  28  C.F.R.,  Section 
0.85(j).   Once  approved,  the  burden,  as  with  all  Pub.L.  92-544 
submissions,  then  falls  on  the  state  bureaus  to  screen 
submissions  to  ensure  that  any  submission  falls  appropriately 
under  the  authorized  purpose. 


295 


Our  analysis  above  reconciles  existing  law  and 
regulations  concerning  the  FBI's  authority  to  exchange  criminal 
history  information  with  Federal,  state,  and  local  governmental 
agencies  and  the  IGRA  and  NIGC's  regulations.   As  noted,  the  Act, 
in  distinguishing  Class  II  and  Class  III  gaming,  creates  somewhat 
different  regulatory  schemes  and,  therefore,  may  impose  different 
duties  on  NIGC.   Bingo  (Class  II)  is  widely  legal  for  both 
charitable  and  noncharitable  purposes  in  most  states.   Thus,  as 
to  Class  II  gaming,  the  Act  clearly  establishes  NIGC 
responsibility  for  screening  of  management  contractors  and 
associated  individuals,  when  gaming  is  contracted  out  by  a  tribe, 
and  primary  management  officials  and  key  employees,  when  the 
gaming  is  conducted  by  a  tribe  itself. 

NIGC's  role  is  more  limited  in  Class  III  gaming  under 
the  IGRA,  especially  when  tribal-state  compacts  are  in  existence. 

NIGC  will  be  able  to  submit  fingerprints  for  management   . 

contractors  and  associated  individuals.   In  all  other  areas,  the 
high  degree  of  regulation  accorded  to  Class  III  gaming  is 
generally  to  be  accomplished  jointly  by  tribes  and  states. 
Background  screening  of  primary  management  officials  and  key 
employees  may  be  conducted  by  NIGC,  unless  preempted  by  a  tribal- 
state  compact  which  places  this  responsibility  elsewhere.   It 
should  be  noted  that  background  screening  on  gaming  employees  who 
do  not  fall  within  the  definition  of  "primary  management 
•official"  or  "key  employee"  is  within  the  exclusive  province  of 
Pub.L.  92-544  approved  statutory  enactments. 

Submission  Procedures 

1 )  NIGC  will  be  informed  of  the  interpretation 
contained  herein,  along  with  the  following  information: 

a)  That  NIGC  will  be  assigned  an  appropriate  OKI  and 
given  fingerprint  cards  for  its  submissions  as  authorized; 

b)  That  NIGC  submissions  will  be  bille-J  to  NIGC  at  the 
existing  governmental  rate  of  $17.00. 

2)  That  state  identification  bureaus  will  be  informed 
of  the  interpretation  contained  herein,  along  with  the  following 
information: 

a)   That  state  statutes  and  supporting  materials  will 
require  review  under  28  C.F.R. ,  Section  0.85(j)  and  Pub.L. 
92-544  by  the  Access  Integrity  Unit; 


296 


b)  That  where  such  processes  are  in  existence  the 
processing  of  fingerprint  cards  for  authorized  state 
agencies  will  be  subject  to  the  existing  Federal  user  fee 
of  $23.00. 

c)  That  authorized  tribal  governments  may  submit  through 
the  appropriate  state  identification  bureau  on  a  tribal 
ORI  to  be  paid  at  $23.00. 


297 


MEMORANDUM  OF  UNDERSTANDING 
REGARDING  THE  DISSEMINATION  OF  CRIMINAL  HISTORY  RECORD 
INFORMATION  BY  THE  NATIONAL  INDIAN  GAMING  COMMISSION 


In  order  to  facilitate  the  undersigned  tribe  (Tribe)  in  determining  the  suitability  of 
individuals  who  have  applied  for  employment  as  key  employees  and  primary  management 
officials  in  its  gaming  operations,  the  National  Indian  Gaming  Commission  (NIGC)  will  be 
obtaining  criminal  history  record  information  (CHRI)  from  the  Federal  Bureau  of  Investigation 
(FBI)  on  these  individuals  and  disseminating  such  information  to  the  Tribe. 


This  memorandum  sets  forth  the  following  conditions  under  which  the  NIGC  will  provide 
CHRI  to  the  Tribe: 


1.  The  FBI  has  retained  the  right  to  approve  the  dissemination  of  CHRI  and  may  at  some 
future  date  prohibit  the  NIGC  from  disseminating  CHRI.  It  is  understood  by  the  Tribe  that  the 
NIGC  will  not  release  any  information  without  having  received  all  required  prior  approvals  from 
the  FBI  and  will  not  release  any  information  where  prohibited  from  doing  so  by  the  FBI.  It  is 
further  understood  that  the  FBI  may  impose  restrictions  on  the  release  and  use  of  the  CHRI  in 
addition  to  those  imposed  by  the  NIGC  and  that  the  Tribe  will  be  subject  to  all  such  additional 
restrictions. 


2.  The  CHRI  provided  by  the  NIGC  may  be  used  by  the  Tribe  solely  for  the  purpose  of 
determining  a  particular  applicant's  suitability  for  employment  in  the  Tribe's  gaming 
operation(s). 


3.  NIGC  responses  will  only  contain  CHRI  information  on  a  particular  applicant  and  will 
not  contain  recommendations  or  conclusions  of  the  NIGC.  The  NIGC  reserves  the  right  to 
furnish  to  the  Tribe  summary  memoranda  containing  the  results  of  the  information  search  of  the 
criminal  history  records  maintained  by  the  FBI. 


4.  CHRI  provided  to  the  Tribe  shall  be  afforded  proper  security.  The  Tribe  shall  ensure 
that  access  to  all  CHRI  furnished  by  the  NIGC,  including  all  summary  memoranda,  is  restricted 
to  personnel  directly  involved  in  licensing  deliberations.  The  Tribe  shall  maintain  records  of 
the  identities  of  all  persons  receiving  access  to  the  CHRI  and  such  records  shall  be  furnished  to 
the  NIGC  upon  request. 


298 


5.  Except  in  connection  with  proceedings  related  to  the  Tribe's  licensing  determinations  for 
gaming  employees,  neither  the  CHRI  nor  any  summary  memoranda  furnished  by  the  NIGC  shall 
be  reproduced,  disseminated,  or  introduced  in  a  court  of  law  or  administrative  hearing,  without 
the  prior  written  consent  of  the  NIGC. 


6.  Employees,  past  and  present,  of  the  NIGC  will  not  be  called  as  witnesses  to  testify 
relative  to  CHRI  disseminated  to  the  Tribe  before  any  Tribal  court  or  in  any  Tribal 
administrative  hearings,  except  in  extraordinary  circumstances  to  be  determined  by  the  NIGC. 


7.  Any  request  for  access  to  the  provided  CHRI-by  the-individual  who  is  the  subject  of  the 
CHRI  shall  be  referred  to  the  NIGC  for  processing  and  an  appropriate  response  pursuant  to  the 
Freedom  of  Information  and  Privacy  Acts  (Title  5,  USC,  Section  552  and  552a). 


8.  Tribal  authorities  will  be  promptly  notified  in  the  event  that  the  NIGC  determines  that 
it  is  necessary  to  discontinue  providing  CHRI  information  to  the  Tribe  (either  in  whole  or  in 
part)  due  to  the  Tribe's  failure  to  comply  with  the  conditions  set  forth  in  this  memorandum. 


The  Tribe  acknowledges  and  consents  to  the  above-stated  conditions  on  this . 
day  of ,  199_. 


Tribe 


Authorized  Tribal  OfHcial 


299 

Mr,  Hope.  Class  I  is  traditional  tribal  games  generally  played  by 
tribal  members  in  conjunction  with  tribal  ceremonies;  that  is  com- 
pletely regulated  by  the  tribes.  Class  II  gaming  is  essentially  bingo, 
pull  tabs  and  associated  games.  Those  are  regulated  primarily  by 
the  tribes  with  oversight  by  the  Commission.  Class  III  is  all  other 
gaming,  including  electronic,  electromagnetic  machine  games, 
poker,  jai  alai,  horse  racing,  craps,  everything  else — lotteries,  ev- 
er3rthing  else  that  you  can  gamble  on. 

Mr.  Abercrombie.  And  Class  III  is  generally  the  bone  of  conten- 
tion with  respect  to  the  publicity  and  the  confrontations.  Is  that  not 
the  case? 

Mr.  Hope.  That  is  true.  Class  3  competes  with  Nevada  and  At- 
lantic City. 

Mr.  Abercrombie.  Okay.  Continue. 

Mr.  Hope.  In  most  of  the  examples  that  were  cited  by  Mr. 
Torricelli  and  Mr.  Trump  as  to  organized — their  alleged  22  orga- 
nized crime  incidents,  occurred  prior  to  the  passage  of  the  Act. 
Some  of  these  incidents  I  am  familiar  with.  Some  of  them  do  not 
involve  indication  of  organized  crime.  I  do  not  have  the  whole  list, 
I  just  heard  them  mention  seven  or  eight  of  them. 

There  are  a  couple  of  issues  as  to  whether  or  not  various  people 
are  members  of  organized  crime.  In  several  cases  I  have  ongoing 
investigations  the  contents  of  which  I  am  not  able  to  divulge  at  this 
time. 

In  terms  of  whether  or  not  organized  crime  is  engaged  in  Indian 
gaming,  I  don't  know.  We  have  not  found  it.  I  have  had  many  con- 
versations with  Mr.  Maloney  both  before  and  after  his  testimony 
last  year.  In  fact,  I  was  on  that  panel  when  he  gave  his  testimony, 
and  we  will  be  vigilant  in  looking  for  it,  and  when  we  find  it,  we 
will  take  our  regulatory  action 

Mr.  Abercrombie.  Excuse  me,  Mr.  Hope.  Mr.  Maloney,  for  pur- 
poses of  the  record,  is  a  member  of  the  Department  of  Justice? 

Mr.  Hope.  Yes. 

Mr.  Abercrombie.  Okay.  Thank  you. 

Mr.  Hope.  His  testimony  has  been  included  in  this  record. 

When  I  find  organized  crime,  I  will  take  my  regulatory  action, 
which  is  twofold,  to  get  the  people  out  of  Indian  gaming,  and,  if  I 
know  of  a  crime  or  evidence  of  a  crime,  to  turn  it  over  to  the  appro- 
priate authorities. 

Enforcement  in  our  organization  is  civil.  We  can  issue  fines  for 
the  violation  of  our  regulations,  tribal  regulations,  and  the  Act,  and 
we  can  issue  orders  of  closure,  but  criminal  prosecution  and  crimi- 
nal enforcement  lies  with  the  Justice  Department  with  whom  we 
coordinate. 

I  think  that  the  regulatory  structure  that  was  enacted  in  1988 
is  becoming  sufficient.  It  is  not  yet  sufficient  because  there  is  still 
a  certain  amount  of  litigation  going  on  as  to  the  meaning  of  dif- 
ferent parts  of  the  law,  particularly  machine  games.  We  thought 
the  litigation  had  been  put  to  bed  in  May  with  the  decision  in  the 
D.C.  Court.  But  it  was  resurrected  last  week  in  an  appeal  where 
a  stay  was  granted  by  the  D.C.  Circuit  Court.  If  you  have  any  ques- 
tions about  the  stay,  I  direct  them  to  my  General  Counsel,  Mr.  Cox. 

But  it  is  my  feeling,  and  it  is  my  experience,  that  there  are  suffi- 
cient controls  and  there  is  sufficient  authority  to  carry  out  the  ef- 


300 

fective  regulation  of  gaming.  It  is  just  that  the  perception  of  some 
of  the  people  on  the  prior  panels  is  that  it  is  not  here  yet.  And  that 
perception  is  probably  accurate  because,  as  Mr.  Torricelli  said,  we 
did  let  gaming  run  loose  for  about  12  or  14  years  before  the  Act 
became  imposed  upon  it  and  we  are  playing  catchup.  It  will  take 
some  time  to  weed  out  the  people  that  need  to  be  weeded  out.  But 
the  process  is  under  way,  and  I  feel  that  the  tools  are  adequate  to 
the  job. 

Mr.  Abercrombie.  Mr.  Calvert,  would  you  care  to  make  any  com- 
mentary or  questions  at  this  point? 

Mr.  Calvert.  Thank  you,  Mr.  Chairman.  I  just,  as  you  know, 
just  walked  back  into  the  hearing. 

Mr.  Abercrombie.  Would  you  like  a  moment  to  gather  your 
thoughts? 

Mr.  Calvert.  Just  a  few  more  minutes,  if  you  wouldn't  mind. 

Mr.  Abercrombie.  Sure. 

Mr.  Quasula,  you  are  in  charge  of  the  Division  of  Law  Enforce- 
ment; is  that  correct? 

Mr.  Quasula.  For  the  Bureau  of  Indian  Affairs,  yes,  sir. 

Mr.  Abercrombie.  Well,  you  just  heard  Commissioner  Hope, 
Chairman  Hope's  remarks.  Would  you  care  to  amplify  on  those  re- 
marks in  the  context  of  the  question  I  asked  about  the  ability  of 
those  engaged — those  tribes  engaged  in  gaming,  to  forestall  pene- 
tration by  organized  crime? 

Mr.  Quasula.  I  would  have  to  agree  that  there  has  been  a  con- 
certed effort  by  tribal  leadership  and  others  in  Indian  gaming  to 
ferret  out  what  is  there.  Going  back  to  Mr.  Trump's  statement,  I 
have  got  to  disagree  in  that  we  have  a  strong  relationship  amongst 
BIA  law  enforcement  people,  tribal  law  enforcement  people.  States, 
counties,  the  FBI,  the  Office  of  Inspector  General,  not  only  with 
law  enforcement  issues  that  come  up  with  Indian  gaming,  but  with 
any  law  enforcement  matters  that  arise  on  Indian  reservations. 

I  think  it  is  fair  to  say  that  we  believe  that  we  always  could  do 
with  more  people,  and  it  behooves  us  to  establish  lines  of  commu- 
nication and  have  a  cooperative  working  relationship  with  any  law 
enforcement  agency. 

Mr.  Abercrombie.  Have  you  ever  had  a  request  made  of  you  by 
a  State  or  any  other  regulatory  agency,  authorized  regulatory  agen- 
cy under  a  compact  agreement,  which  you  refused  or  which  you  ar- 
gued with? 

Mr.  Quasula.  No.  I  think  that  we  have  cooperated  to  the  hilt. 
We  have  made  a  deliberate  effort  to  share  names  with  State  law 
enforcement  people,  with  county  law  enforcement  people,  with  the 
FBI.  In  fact,  we  have  a  written  Memorandum  of  Understanding 
with  the  FBI  to  check,  name  check,  fingerprint  check,  for  anybody 
that  wants  to  get  into  Indian  gaming.  And  we  have  been  more  than 
cooperative  with  anybody  that  is  interested  in  making  sure  that 
people  who  are  involved  in  Indian  gaming  are  on  the  up  and  up. 

Mr.  Abercrombie.  Has  any  agency  within  which  there  is  an 
agreement  under  compact  arrangements,  ever  registered  a  formal 
complaint  with  your  division  as  to  a  lack  of  cooperation  with  re- 
spect to  law  enforcement? 
Mr.  Quasula.  Not  to  my  knowledge,  no. 
Mr.  Abercrombie.  How  long  have  you  been  on  the  job? 


301 

Mr.  QUASULA.  With  the  Bureau  of  Indian  Affairs,  a  little  over  19 
years;  here  at  headquarters,  a  little  less  than  three  years. 

Mr.  Abercrombie.  So  you  have  actually  been  in  the  law  enforce- 
ment end  of  this  for  the  majority  of  the  time  the  law  has  been  in 
existence? 

Mr.  QuASULA.  That  is  correct. 

Mr.  Abercrombie.  You  have  heard  the  testimony  of  Commis- 
sioner Hope  and  Secretary  Deer  of  the  IRS.  Now,  they  didn't  go 
into,  Mr.  Palmer  didn't  go  into  necessarily  all  of  the  testimony,  you 
may  not  have  had  a  chance  to  read  it  yet.  I  commend  it  to  your 
attention.  But  from  what  you  heard,  could  you  comment  on  the 
suggestions  of  the  IRS  with  respect  to  improvements  that  might  be 
made  under  the  law  in  the  area  of  the  Bank  Secrecy  Act,  et  cetera, 
in  the  context  of  improving  the  capacity  of  Indian  gaming  to  fore- 
stall criminal  activity? 

Mr.  QuASULA.  You  know,  personally,  I  am  not  totally  familiar 
with  the  statutes  they  are  talking  about  because  that  is  not  some- 
thing we  do  every  day.  We  rely  on  IRS  and  others  to  have  the  ex- 
pertise. But  I  would  think  that  across  the  board,  if  it  is  going  to 
ensure  just  that  much  more  that  Indian  gaming  is  on  the  up  and 
up,  then  I  would  think  that  anybody  would  welcome  that. 

Mr.  Abercrombie.  Well,  I  think  the  thrust,  just  so  I  make  sure 
that  my  questions  to  you  are  clear,  the  thrust  of  the  IRS  testimony 
and  the  Department  of  Justice  testimony  was  not  that  the  casinos 
were  acting  in  a  derelict  manner,  but  rather  that  those  individuals 
and  groups  who  might  want  to  take  advantage  of  the  casino  oper- 
ations for  their  criminal  activity  could  be  more  thwarted  than  they 
are  now,  should  their  recommendations  be  put  into  place. 

Mr.  Ajbercrombie.  Secretary  Deer,  do  you  have  a  comment  on 
that  testimony? 

Ms.  Deer.  I  have  not  had  an  opportunity  to  read  it,  but  I  believe 
that  the  Indian  tribes  are  open  for  ideas  to  improve  operations  and 
to  keep  the  operations  accountable,  honest  and  efficient,  and  so  it 
would  be  my  assumption  that  there  would  be  a  discussion  and 
study  of  this,  and  if  this  was  determined  to  improve  the  operations, 
then  it  probably  should  be. 

Mr.  Abercrombie.  Chairman  Hope? 

Mr.  Hope.  Mr.  Chairman,  we  serve  on  the  committee  with  the 
Treasury,  working  on  this  issue,  and  to  my  knowledge,  there  is  no 
Indian  tribe  which  has  an  objection  to  this  being  incorporated  in 
the  process. 

Mr.  Abercrombie.  What  I  would  ask  you  to  do,  then,  is  take  a 
look  at  the  IRS  testimony.  Perhaps  over  the  next  two  weeks  while 
the  record  is  open,  you  might  want  to  submit  some  commentary  on 
it  or  some  observations  on  that  testimony  for  the  record.  Could  I 
ask  you  to  do  that?  I  think  it  would  prove  very  helpful  to  us. 

Commissioner  McKeag,  I  started  with  you,  and  you  didn't  get  an 
opportunity  to  speak.  Would  you  care  to  comment  on  an3rthing  that 
has  been  said  to  this  point  or  amplify  any  other — I  would  like  you 
to  answer,  if  you  could,  in  a  further  context — Mr.  Trump  made, 
from  my  point  of  view,  some  rather  unfortunate  observations  with 
respect  to  the  capacity  or  desire  of  Indians  to  address  some  of  the 
questions  that  he  raised.  I  presume  as  a  member  of  the  Indian 
Gaming  Commission  you  have  a  view  on  that? 


302 

Ms.  McKeag.  Well,  quite  frankly,  I  wish  one  of  the  Members  of 
the  committee  had  asked  Mr.  Trump  if  he  ever  visited  an  Indian 
casino  or  an  Indian  bingo  operation,  but  be  that  as  it  may,  I  do 
want  to  emphasize  what  the  Commission's  role  is  as  part  of  this 
Act.  Mr.  Hope  said  we  have  civil  enforcement  responsibility.  We  are 
the  preventive  medicine  arm  of  the  Act.  We  do  the  background  in- 
vestigations which  assure  that  the  criminal  element  does  not  be- 
come involved  in  Indian  gaming. 

In  the  existing  operations,  we  can  call  in  any  contract  where  we 
suspect  there  may  be  some  problem.  We  have  hired  field  staff 
which  have  visited  substantially  all  gaming  operation  in  the  entire 
country,  since  becoming  operational  on  February  22nd  of  this  year. 

In  the  testimony,  there  is  a  list  of  what  we  have  done,  including 
working  with  the  FBI,  with  our  memorandums  of  understanding, 
so  that  we  can  process  fingerprints.  We  can  have  access  to  the 
FBI's  criminal  records  that  are  available  to  us,  so  that  we  can  find 
out  whether  or  not  there  may  be  some  criminal  element.  When  it 
comes  to  actually  enforcing  that,  we  have  to  turn  to  the  FBI,  and 
they  do  the  actual  enforcement  of  the  criminal  problems  on  the  res- 
ervation. 

Mr.  Abercrombie.  Thank  you. 

Commissioner  Frank,  would  you  care  to  comment  at  this  junc- 
ture? 

STATEMENT  OF  HON.  JOEL  FRANK 

Mr.  Frank.  Thank  you,  Mr.  Chairman. 

One  of  the  things  I  would  also  like  to  point  out  is  that  the  act 
does  say  that  we  are  oversight,  and  that  we  have  oversight  respon- 
sibility when  it  comes  to  the  regulating  of  Indian  gaming,  and  that 
the  primary  responsibility  of  regulating  lies  with  the  tribes.  And  to 
that  end,  I  think  that  some  of  the  earlier  comments  that  were 
made  by  earlier  panels  suggested  that  there  was  no  regulation 
whatsoever,  that,  I  could  point  out,  that  there  are  tribes  out  there 
that  do  have  the  sophistication  and  the  capability  of  regulating 
maybe  far  superior  than  maybe  some  other  States  or  organizations 
in  law  enforcement  may  have  or  may  not  have,  and  that  they  have 
demonstrated  that. 

I  think  there  is  one  group  down  in  Florida  that  have  exercised 
their  governmental  regulatory  responsibilities  in  trying  to  make 
sure  that  there  are  no  criminsd  elements  in  their  gaming  operation, 
and  that  is  still  going  on  as  an  ongoing  review. 

I  think  that  as  far  as  a  review  is  concerned,  that  is  something 
that  is  never  going  to  cease,  and  I  think  that  as  more  tribes  expand 
their  regulatory  enforcement  capabilities,  we  are  going  to  see  even 
greater  scrutiny  than  what  the  current  law  in  which  Indian  gaming 
is  now  currently  regulated.  So  I  just  wanted  to  point  that  out. 

Mr.  Abercrombie.  Thank  you. 

I  don't  want  to  anticipate  Mr.  Calvert's  question,  but  he  did  raise 
some  questions  before  about  possible  management  contracts  with 
existing  casino  operations  and  Class  III  operations  in  California 
and  some  of  the  questions  that  that  might  raise. 

If  you  are  ready,  Mr.  Calvert,  having  established  that  context, 
which  I  found  very  interesting  and  informative,  I  would  defer  to 
you  at  this  juncture. 


303 

Mr.  Calvert.  Thank  you,  Mr.  Chairman. 

As  I  stated  in  my  opening  statement,  I  am  supportive  of  Class 
I  and  Class  II  gaming  in  the  State  of  California.  And  in  my  mind's 
eye,  that  is  not  the  issue  today,  as  far  as  it  relates  to  California. 
It  is  the  issue  of  Class  III  gaming  that  is  presently  taking  place 
in  California,  which,  as  you  know,  we  have  no  law  in  California 
that  allows  Class  III  gaming. 

There  are  several  reservations  that  have  slot  machines  in  San 
Diego  County,  I  believe  all  of  those  operations  are  in  San  Diego 
County,  approximately  700  slot  machines.  And  as  I  understand  the 
limits  of  your  responsibilities  in  the — as  far  as  your  regulatory  lim- 
itations, that  you  can  only  regulate  Class  I  and  Class  II  gaming; 
is  that  correct,  in  California? 

Mr.  Hope.  Well,  most  of  those  machine  games  are  in  Class  II  op- 
erations. And  insofar  as  we  regulate  Class  II  operations,  we  forbid 
the  operation  of  Class  III  gaming  without  a  compact.  TTie  current 
situation  is — and  this  is  not  limited  to  San  Diego  County  but,  in 
fact  pandemic  throughout  the  State  of  California — that  the  tribes 
have  taken  the  position  that  the  act  includes  "electronic  devices"  as 
bingo  or  pull-tabs. 

They  have  sued  us  to  prevent  our  enforcing  the  Act.  And  we  have 
won  in  court,  in  a  25-page  opinion  by  the  judge  in  the  district 
court.  And  they  have  appealed.  And  as  part  of  the  appeal,  they  re- 
quested that  the  Court  of  Appeals  grant  them  a  stay,  pending  the 
appeal,  and  that  was  granted  by  the  Court  about  two  weeks  ago. 

It  is  very  difficult  to  marshal  the  forces  of  the  U.S.  Attorneys  and 
to  convince  them  that  it  is  a  useful  expenditure  of  their  money  to 
prosecute  these  machine  games  at  a  time  when  some  of  the  Califor- 
nia tribes  have  sued  us  over  the  machine  games.  TTiree  of  those 
tribes  are  from  California  and  have  a  "stay"  against  our  enforcing 
the  law.  Coupled  with  this,  is  the  possibility  that  these  may  become 
legal  by  another  decision  in  California  by  Judge  Burrell,  which  is 
being  appealed  by  the  State  on  the  question  of  whether  or  not  the 
State  is  required  to  negotiate  for  this  form  of  gaming.  So  it  is  the 
courts  that  are  slowing  us  down,  at  this  point. 

Mr.  Calvert.  The  point  that  I  am  trying  to  arrive  at  in  the  in- 
terim, while  this  stay  is  in  effect,  is  there  any  regulation  at  all  on 
those  slot  machines? 

Mr.  Hope.  The  tribes 

Mr.  Calvert.  Since  that  is  Class  III  gaming? 

Mr.  Hope.  The  tribes  consider  them  to  be  Class  II  and  are  regu- 
lating them  as  though  they  were  Class  II  gaming. 

Mr.  Calvert.  So  they  are  self-enforcing  their  own  machines? 

Are  you  involved  in  regulating  the — let  me  ask  this  question 

Mr.  Hope.  No,  we  are  not  involved  in  regulating  machine  games. 

Mr.  Calvert.  Do  you  know  what  the  source  of  money,  where  the 
source  of  money  came  from  to  acquire  those  machines? 

Mr.  Hope.  My  understanding  is  generally  that  they  came  from 
the  profits  of  the  other  Class  II  operations. 

Mr.  Calvert.  But  again,  that  is  from  listening  to  those  individ- 
uals who  are  operating  the  casino  themselves  as  a  Class  II  casino, 
the  Indian  tribe  itself? 

Mr.  Hope.  Yes. 


304 

Mr.  Calvert.  The  revenue,  then,  there  is  no  trace  or  no  track  on 
that  revenue  that  is  being  generated  by  those  slot  machines,  at  the 
present  time,  because  there  is  no  compact  with  the  State  of  Cahfor- 
nia? 

Mr.  Hope.  We  do  not  regulate  them,  that  is  correct.  And  I  don't 
think  it  is  anyone  else's  jurisdiction  other  than  the  tribes  to  regu- 
late, I  don't  think  there  is  a  claim  of  jurisdiction  elsewhere. 

Michael,  would  you 

STATEMENT  OF  MICHAEL  COX 

Mr.  Cox.  My  name  is  Michael  Cox,  I  am  the  Greneral  Counsel  to 
the  National  Indian  Gaming  Commission.  The  way  the  Commission 
regulates  the  revenues  would  be  through  the  review  and  approval 
of  the  management  contracts  the  tribes  may  have  entered  into  with 
their  management  company  which  would  include  the  operation  of 
their  bingo  games  and  those  machines.  So  the  Commission,  in  some 
instances,  has  called  in  some  of  the  contracts  in  California  for  re- 
view of  those  contracts,  and  also  to  conduct  background  investiga- 
tions on  those  persons  that  have  a  financial  interest  in  the  con- 
tract. 

So  the  Commission  does  have  the  capability  and  is  going  to  be 
looking  at  the  source  of  and  where  the  revenues  are  going,  and  how 
they  are  being  used.  That  is  part  of  the  Commission's  responsibility 
under  our  management  contract  review  and  also  the  ordinance  re- 
view, tribal — Indian  tribes  have  to  have  tribal  gaming  ordinances 
which  are  approved  by  the  Commission.  And  one  of  the  require- 
ments of  those  ordinances,  is  the  tribes  have  done  annually  an 
independent  audit  of  their  gaming  revenues,  and  that  has  to  be 
submitted  to  the  Commission. 

Mr.  Calvert.  I  understand,  at  the  present  time,  we  do  not  know 
what  the  source  of  funds  were  for  those  slot  machines  nor  do  we 
know  where  those  dollars  are  going  to  from  the  slot  machines;  is 
that  accurate  to  say? 

Mr.  Cox.  At  the  present  time,  we  do  not  know  where — how  the 
revenues  are  being  used  or  where  the  tribes  obtained  the  money  to 
acquire  the  machines.  In  some  cases,  as  the  Chairman  pointed  out, 
they  were  through  the  revenues  from  their  bingo  operations.  In 
other  cases,  they  are  leased  from  leasing  companies  who  come  into 
the  State  of  California  and  who  share  the  profits  with  the  tribe, 
and  those  monies  are  leaving  the  State,  going  into  the  pocket  of 
those  vendors. 

Ms.  McKeag.  Excuse  me,  if  I  could  just  add  to  that,  Mr.  Calvert, 
that  does  not  mean  that  we  will  not  be  able  to  know.  As  indicated 
in  our  testimony,  we  became  operational  on  February  22nd.  There- 
fore, only  recently  have  we  had  review  management  contracts. 

Before  February  22,  23  did  not  have  authority  to  review  audits 
or  call  in  and  review  existing  management  contracts  where  there 
were  questionable  operations  or  use  of  the  funds  or  the  source  of 
the  funds.  In  addition,  our  field  staff  could  not  go  out  and  collect 
that  kind  of  information.  We  do  now,  and  we  intend  to  do  our  job. 

Mr.  Calvert.  Let  me  ask  a — I  don't  want  to  ask  speculative 
questions,  but  we  have  heard  a  lot  of  that  today,  so  I  will  carry 
that  on.  The  stay  that  is  in  place  now,  we  have  a  case  in  California, 
you  mentioned  earlier,  Mr.  Hope,  which  may  allow  Class  III  gam- 


305 

ing  to  take  place  in  California.  And  at  the  present  time,  there  isn't 
a  compact  with  California,  obviously,  because  we  don't  allow  Class 
III  gaming  in  the  State  of  California. 

We  have  94,  I  believe  is  it  94  federally  recognized  Indian  tribes 
in  California.  I  think  it  is  also  accurate  to  say  that  many  legitimate 
casino  operators,  such  as  Caesars  World,  are  coming  into  California 
looking  for  management  agreements  to  operate  on  tribe  property, 
based  upon  the  fact,  I  think,  that  they  want  to  operate  Class  III 
gaming,  not  Class  I  and  Class  II  gaming. 

Mr.  Hope.  I  am  sure  that  they  have  negotiated  these  agreements 
in  anticipation  that  Class  III  gaming  would  become  legal.  I  know 
that  they  would  never  risk  losing  their  Nevada  licenses  by  operat- 
ing in  a  gray  area  in  some  other  State. 

Mr.  Calvert.  So  in  anticipation  that  Class  III  gaming  will  come 
to  California,  many  legitimate  operators  from  Nevada  and  else- 
where are  coming  into  California  looking  for  management  agree- 
ments? 

Mr.  Hope.  The  Agua  Caliente  Agreement,  to  which  you  referred, 
has  not  been  submitted  to  us  yet.  They  have  not  finished  their 
agreement.  But  my  understanding  is  that  it  provides  only  for  Class 
II  and  specifically  for  bingo  and  pull  tabs,  although  they  expect 
that  if  Class  III  becomes  legal  that  they  will  manage  that  also. 

The  casino  in  California  is  a  word  that  should  not  be  used  syn- 
onjrmously  with  Class  III.  There  are  a  number  of  compacts  in  the 
State  of  California  for  Class  III  gaming,  but  that  is  only  for  off- 
track  betting,  at  the  present  time.  They  are  called  casinos  by  a  lot 
of  people. 

When  you  heard  testimony  earlier  today  about  some  number  of 
casinos  operating,  that  would  include  the  five  California  off-track 
betting  operations  as  casinos.  "Casino"  is  generally  used  as  any- 
thing other  than  Class  II. 

The  compact  with  the  State,  whether  or  not  there  is  one  in  Cali- 
fornia, probably  will  have  to  do  with  the  lottery  definition  in  Cali- 
fornia, as  to  who  is  allowed  to  do  what. 

Mr.  Calvert.  The  concern  that  I  have  here  is  that  you  have  a 
relatively  small  stafi",  obviously  your  jurisdiction  is  a  Class  I,  Class 

II  gaming? 

Mr.  Hope.  Yes. 

Mr.  Calvert.  California  could  conceivably  be  the  largest  gam- 
bling State  in  the  United  States,  certainly  Las  Vegas  accounts  for 
the  majority  of  all  gambling  dollars  expended  in  this  country. 
There  is  tremendous,  as  you  know,  tremendous  interest  in  locating 
casinos  in  California. 

Mr.  Hope.  Yes. 

Mr.  Calvert.  Do  you  believe,  does  it  matter  whether  it  was  In- 
dian reservations  or  legitimate  casino  operations  that  are  presently 
located  in  Nevada?  If  you  had  100  casinos  in  Nevada  spread  all 
over  the  place,  do  you  believe  that  presently  with  your  staff,  with 
reasonable  changes  within  the  Indian  Gaming  Regulation  Act  that 
is  being  proposed,  that  we  could  monitor  and  make  sure  that  crime 
S5aidicates  are  not  involved  in  California? 

Mr.  Hope.  Yes.  Not  through  my  staff,  but  under  the  Act.  If  Class 

III  gaming  were  allowed,  there  would  be  a  compact  with  the  tribe, 
among  the  tribes  in  the  State  of  California,  which  would  call  for 


306 

regulation  by  the  agency  that  the  tribe  and  the  State  agreed  upon, 
whether  that  was  the  State  PoUce  or,  in  some  cases,  tribal  police 
or  some  combination  or  some  new  entity. 

California  recently  tried  to  create  a  gaming  commission  through 
its  legislature,  which  I  understand  has  not  yet  been  passed.  It 
failed  once  and  is  up  again.  There  would  be  some  sort  of  vehicle 
within  the  State  which  would  be  financed  most  likely  from  the  rev- 
enues of  these  casinos,  so  that  it  would  not  be  a  drain  on  the  re- 
sources of  the  State  of  California,  and  would,  in  fact,  probably  pro- 
vide jobs  and  revenue  and  a  tax  base  for  the  State. 

To  say,  as  has  been  said  before,  that  Indians  don't  pay  taxes,  is 
simply  wrong.  The  tribe  does  not  pay  taxes  on  some  income.  But 
when  that  money  is  distributed  to  tribal  members,  that  gaming  in- 
come is  taxed  the  same  way  as  anyone  else. 

It  is  very  similar  to  a  charity,  a  501  (C)(3).  The  charity  does  not 
pay  taxes,  but  its  employees  do.  And  the  tribe  in  Connecticut,  you 
will  hear  on  the  next  panel,  provide  a  tremendous  tax  base  for  the 
State  of  Connecticut. 

Mr.  Calvert.  I  guess  the  concern  is  that  if  we  don't  amend  the 
Indian  Gaming  Regulation  Act  and  the  courts  decide  the  Class  III 
gaming  could  come  to  California,  which  is  conceivable,  then  the 
concern  at  that  point  is  going  to  be  regulating  gambling  in  Califor- 
nia, large-scale  gambling.  And  I  just  want  to  hear  from  you  that 
you  are  comfortable,  and  from  the  BIA's  opinion,  that  they  are  com- 
fortable that  that  type  of  major  gambling,  gaming  in  California 
could  be  regulated  and  make  sure  that  organized  crime  does  not 
enter  the  State  of  California. 

Mr.  Hope.  I  am  sure  that  California  and  the  tribes  can  come  up 
with  an  adequate  system,  yes. 

Mr.  Calvert.  If  I  could  continue. 

There  was  one  question  that  I  asked  the  last  panel,  and  I  would 
like  to  ask  this  panel.  It  is  common  knowledge  that  Class  III  gam- 
ing is  being  conducted  today,  of  course,  as  I  mentioned  earlier,  on 
many  California,  New  Mexico,  and  Washington  State  Indian  res- 
ervations, without  a  tribal-state  compact,  including  electronic 
games  of  chance,  video  poker,  slot  machines,  and  video  blackjack. 
Is  it  not  a  violation  of  State  and  Federal  law  to  conduct  such  gam- 
ing without  a  compact,  assuming  the  States  can  compact  the  games 
in  the  first  place.  That  is  being  a  little  redundant,  I  am  asking  that 
again. 

Mr.  Hope.  I  think  most  of  the  Washington  State  tribes  have  com- 
pacts. I  know  there  are  one  or  two  that  do  not  in  the  Eastern  side, 
but  there  are  many  compacts  in  place. 

I  would  like  my  General  Counsel,  though,  to  answer  this  ques- 
tion, if  it  is  all  right? 

Mr.  Cox.  It  is  a  violation  of  Federal  law,  it  is  certainly  a  viola- 
tion of  the  Indian  Gaming  Regulatory  Act  to  operate  electronic 
games  without  a  tribal-state  compact,  and  it  is  also  a  violation  of 
another  Federal  law,  the  Johnson  Act,  which  prohibits  gambling 
devices  in  Indian  country. 

Again,  as  has  been  pointed  out,  some  of  the  tribes  argue  that  cer- 
tain kinds  of  games,  they  believe,  fall  within  Class  II  gaming.  The 
Commission  rejected  that,  and  as  we  have  mentioned,  we  are  in 


307 

court  with  the  tribes  on  that,  and  we  have  been  enjoined  from  con- 
ducting any  enforcement  with  respect  to  those  kinds  of  games. 

With  respect  to  other  kinds  of  games,  which  clearly — machine 
games,  which  clearly  fall  within  Class  III,  the  recent  decision  by 
Judge  Burrell  in  Sacramento  certainly  is  going  to  cause  the  United 
States  attorneys  in  California,  who  have  ultimately  the  discretion 
to  decide  what  to  do  about  the  gambling  in  the  State  by  the  tribes, 
they  have  to  consider  that  decision.  The  judge  has  indicated  that 
California  does  not  prohibit  gambling  devices  as  a  matter  of  public 
policy,  believing  that  certain  types  of  gambling  equipment  used  as 
part  of  the  State  lottery  are  similar,  if  not  identical,  to  the  types 
of  electronic  games  the  tribes  have  requested  the  State  to  negotiate 
a  compact  for.  That  kind  of  a  decision  certainly  requires  the  United 
States  attorneys  to  determine  whether  their  resources  are  best 
used  on  prosecuting  or  seizing  devices  which  may  later  turn  out  to 
be  the  subject  of  tribal-state  compacts. 

It  is  a  difficult  kind  of  complex  problem  when  you  have  courts 
that  have  ruled  that  a  State  is  obligated  to  negotiate  over  that  type 
of  gambling  while,  at  the  same  time,  it  is  certainly  not  legal  to  op- 
erate with  those  machines  while  you  are  attempting  to  get  a  com- 
pact. 

Mr.  Abercrombie.  Does  that  satisfy  the  question? 

Mr.  Calvert.  Yes,  Mr.  Chairman,  thank  you. 

Mr.  Abercrombie.  I  have  nothing  further  at  this  point,  then,  for 
the  panel  other  than  to  say  thank  you  very  much,  and  to  indicate 
that  I  don't  want  to  gamble  on  the  endurance  level  of  my  kidneys 
any  longer,  so  I  will  declare  a  five-minute  recess  before  our  fourth 
and  final  panel  comes  up.  I  trust  that  everyone  will  take  advantage 
of  it. 

[Recess.] 

PANEL  CONSISTING  OF  TIMOTHY  WAPATO,  EXECUTIVE  DIREC- 
TOR, NATIONAL  INDIAN  GAMING  ASSOCIATION;  RICHARD 
JAMES  ELROY,  RETIRED  SPECIAL  AGENT,  FEDERAL  BUREAU 
OF  INVESTIGATION;  G.  MICHAEL  BROWN,  PRESIDENT  AND 
CEO,  MASHANTUCKET  PEQUOT  NATION'S  FOXWOODS  CA- 
SINO AND  HIGH  STAKES  BINGO,  LEDYARD,  CT,  ACCOM- 
PANIED BY  LT.  COL.  ROBERT  ROOT,  CONNECTICUT  STATE 
POLICE;  F.  WILLIAM  JOHNSON,  CEO,  MYSTIC  LAKE  CASINO, 
SHAKOPEE  SIOUX  TRIBE,  PRIOR  LAKE,  MN  ACCOMPANIED 
BY  POLICE  CHIEF  DICK  POWELL,  CITY  OF  PRIOR  LAKE  PO- 
LICE  DEPARTMENT 

Mr.  Abercrombie.  As  is  often  the  case  with  an  issue  that  has 
high  visibility  and  interest  when  we  have  a  panel — ^we  have  several 
panels,  and,  unfortunately,  it  takes  some  time  to  get  to  them. 

I  want  to  thank  the  members  of  our  fourth  panel,  Mr.  Elroy,  Mr. 
Wapato,  Mr.  Brown,  and  Mr.  Root,  Johnson,  and  Powell  for  their 
patience,  and  I  genuinely  mean  that.  Aloha,  and  welcome  to  all  of 
you,  we  are  anxious  to  hear  what  you  have  to  say. 

We  will  move  right  to  it  with  Mr.  Elroy,  who  is  a  retired  special 
agent  of  the  Federal  Bureau  of  Investigation. 

Mr.  Brown.  He  is  not  here,  sir. 

Mr.  Abercrombie.  Oh,  he  is  not  here? 

Mr.  Brown.  He  is  here,  but  I  think  he  is  in  the  men's  room. 


308 

Mr.  Abercrombie.  Is  his  testimony  submitted? 
Mr.  Brown.  I  don't  know. 

STATEMENT  OF  TIMOTHY  WAPATO 

Mr.  Abercrombie.  Mr.  Wapato? 

I  may  have  mispronounced  your  name. 

It  is  Wapato,  is  that  correct? 

Mr.  Wapato.  That  is  correct. 

Mr.  Abercrombie.  I  beg  your  pardon. 

Mr.  Wapato.  Mr.  Chairman,  my  name  is  Tim  Wapato.  Before  I 
get  into  my  testimony  I  have  some  people  I  would  like  to  introduce. 
They  have  been  sitting  very  patiently  in  the  audience  also. 

Mr.  Abercrombie.  Please. 

Mr.  Wapato.  Last  month,  the  Mille  Lacs  Band  of  Ojibway  in 
northern  Minnesota  dedicated  the  first  permanent  primary  and 
secondary  school  buildings  on  its  reservation.  These  schools  were 
not  built  with  Federal  tax  dollars  or  with  State  funds,  but  were  fi- 
nanced entirely  by  revenues  generated  from  the  tribe's  own  casino. 

I  would  like  to  welcome  and  introduce  the  Mille  Lacs  chair- 
person, Marge  Anderson,  along  with  the  delegation  of  tribal  elders 
and  five  young  members  from  the  Nay-Ah-Shing  school,  in  the  first 
student  class.  And  we  are  very  honored  to  have  them  here.  I  won- 
der  

Mr.  Abercrombie.  Could  you  folks  kindly  stand  so  that  we  can 
recognize  you. 

Are  they  out  in  the  hallway  now? 

They  probably  had  the  same  kind  of  endurance  problem  I  had. 

Mr.  Wapato.  Mr.  Chairman,  we  had  four  elders  accompany  us  to 
learn  a  little  bit  what  passes  for  process  in  this  hearing,  and 

Mr.  Abercrombie.  As  you  can  tell  from  the  previous  panel,  free 
speech  reigns. 

Mr.  Wapato.  And  I  appreciate  that. 

Mr.  Abercrombie.  No  matter  how  idiotic. 

Mr.  Wapato.  Like  they  say,  that  is  what  made  America  great. 

Mr.  Chairman,  my  name  is  Tim  Wapato,  I  am  the  Executive  Di- 
rector of  the  National  Indian  Gaming  Association.  As  you  may  be 
aware,  prior  to  serving  as  the  Executive  Director  with  the  National 
Indian  Gaming  Association,  I  spent  some  time  as  the  Commissioner 
at  the  Administration  for  Native  Americans,  which  is  charged  with 
the  responsibility  for  developing  and  providing  grants  to  Indian 
tribes  for  economic  development. 

I  also  spent  a  considerable  amount  of  time  as  a  police  officer.  I 
retired  from  the  Los  Angeles  Police  Department  as  a  lieutenant  of 
detectives.  During  that  time,  I  served  as  a  lieutenant  of  a  special 
investigation  team  investigating  robberies,  homicides,  vice  and  nar- 
cotics. During  that  time,  I  had  been  loaned  to  the  Bureau  of  Indian 
Affairs  to  assist  in  setting  up  a  poUce  department  on  the  Colville 
Confederated  Tribes  Reservation,  which  is  also  my  tribe  in  the 
State  of  Washington. 

I  have  also  worked  as  a  consultant  in  the  gaming,  Indian  gaming 
and  have  worked  with  the  Sycuan  Tribe  of  California  and  its  gam- 
ing Commission  to  bring  the  police  department  and  the  gaming  se- 
curity and  surveillance  into  compliance  with  the  Indian  Gaming 
Regulatory  Act.  I  mention  that  because  I  believe  with  my  varied 


309 

background  I  have  some  experience  and  knowledge  to  provide  the 
subcommittee  with  an  overview  of  law  enforcement,  of  regulation, 
and  security  status  in  the  Indian  gaming  industry. 

I  can  tell  you  that  no  other  economic  activity  in  this  country  has 
more  layers  of  regulation  specifically  devoted  to  protecting  against 
the  influence  of  organized  crime.  NIGA,  as  you  may  be  aware,  is 
an  association  of  Indian  tribes,  it  is  a  nonprofit  organization  work- 
ing to  protect  tribal  sovereignty  and  to  promote  tribal  economic  de- 
velopment through  gaming  enterprises. 

It  also  serves  to  provide  technical  assistance  to  its  member 
tribes,  including  law  enforcement  and  security.  Selected  officers, 
and  we  have — our  Chairman  is  in  the  audience,  Richard  G.  Hill  is 
Chairman  from  the  Oneida  Tribe.  Our  Vice  Chairman  is  Dan  Tuck- 
er who  is  from  California,  Sycuan  Tribe.  Jacob  Viarrial  was  in  the 
audience,  I  don't  know  if  he  is  still  here,  and  Nathan  Small. 

Mr.  Chairman,  in  1988,  against  the  wishes  of  tribes  across  the 
Nation,  and  the  non-Indian  gaming  industry  with  active  support  of 
State  government  officials  fought  for  and  secured  the  enactment  of 
the  Indian  Gaming  Regulatory  Act,  IGRA.  This  act  not  only  did  not 
authorize  or  permit  Indian  tribes  to  engage  in  gaming,  but  it,  in 
fact,  limited  tribal  sovereignty  in  this  area  as  confirmed  in  the  Su- 
preme Court's  decision  in  the  Cabazon  case. 

Despite  this  loss  of  tribal  sovereignty  and  control  over  economic 
operations,  tribes  were  successful  in  making  gaming  a  significant 
economic  development  tool.  While  Indian  gaming  amounts  to  only 
3  percent,  3  to  4  percent  of  the  total  gaming  proceeds  in  the  United 
States,  that  3  to  4  percent  by  law  must  be  dedicated  to  govern- 
mental activities  and  governmental  services. 

The  tribes  use  them,  as  you  have  heard,  for  such  things  as  the 
school  that  I  just  spoke  about,  at  Mille  Lacs,  but  they  also  build 
sewer  and  water  systems,  roads,  medical  facilities,  senior  citizen  fa- 
cilities, and  similar  services.  Even  with  this  documented  beneficial 
impact  of  Indian  gaming  on  Indian  and  non-Indian  people,  we  once 
again  are  faced  with  the  threat  from  a  small  number  of  individuals, 
most  of  whom  you  heard  here  today,  on  the  Federal  and  State 
level,  in  concert  with  representatives  of  the  non-Indian  gaming  in- 
dustry, to  further  erode  tribal  sovereignty  by  anti-Indian  amend- 
ments to  IGRA. 

These  individuals  who  you  have  heard  have  made  allegations 
that  Indian  gaming  is  largely  unregulated  and  is  crime  ridden.  As 
you  heard  from  a  number  of  agencies  in  the  previous  panels,  there 
are  four  or  five  areas  of  regulation  that  exist  in  Indian  gaming. 

The  first  is  the  Indian  tribe  itself,  and  the  Indian  tribe  as  a  sov- 
ereign has  the  right  and  the  duty  and  the  responsibility  to  protect 
their  membership.  I  would  like  to  provide  just  a  very  brief  outline 
of  those  levels  of  regulation  that  exist. 

Mr.  Abercrombie.  Mr.  Wapato,  your  testimony  will  be  entered 
in  full.  I  have  gone  over  it,  I  think  it  is  quite  detailed  and  to  the 
point. 

Perhaps  you  could  summarize  for  us. 

Mr.  Wapato.  We  have  the  four  levels  of  regulation,  the  tribal 
regulation,  you  are  going  to  hear  some  people  on  this  panel,  the 
specifics  that  goes  into.  You  have  the  Bureau  of  Indian  Affairs  that 
is  responsible  for  review  and  the  approval  of  contracts;  you  have 


310 

the  National  Indian  Gaming  Commission  who  has  testified,  that 
also  has  the  review  and  the  oversight;  you  have  the  Federal  Bu- 
reau of  Investigation;  you  have  the  U.S.  Attorney.  All  of  these  lev- 
els of  enforcement  and  regulation  come  into  play  on  an  Indian  res- 
ervation and  an  Indian  casino.  And  I  think  that  to  the  contrary  of 
being  unregulated  or  nonregulated,  there  are  layer  upon  layer  of 
regulatory  authorities  that  are  and  must  be  exercised  in  Indian 
gaming. 

I  think  one  of  the  things  that  must  be  pointed  out,  the  list  of  sup- 
posed infiltration  by  organized  crime  of  22  instances  documented 
by  news  media  and  news  clips  are  in  the  most  part,  for  the  large 
part,  pre-IGRA,  or  passage  of  the  law  in  1988.  And  that  we  will 
provide  to  this  committee  in  the  time  that  the  record  is  open,  docu- 
mentation of  what  each  and  every  one  of  those  so-called  allegations 
is.  I  think  one  of  the  most  notable  cases  is  the  Rincon  case  which 
several  people  spoke  to. 

A  specific  response  was  not  given  to  a  question  that  was  asked 
of  the  gentleman  from  the  FBI.  That  case  was  brought  to  the  atten- 
tion of  the  Federal  Bureau  of  Investigation  by  the  Indian  tribe  it- 
self. 

The  overture  in  that  case  was  made  to  an  individual  tribal  mem- 
ber, not  to  the  tribal  government.  The  tribal  government  identified 
that,  they  went  to  the  Federal  authorities  on  several  occasions  be- 
fore they  were  successful  in  having  the  Federal  authorities  proceed 
in  a  prosecution. 

There  is  another  alleged  incident  of  organized  crime,  where 
somebody  was  supposedly  hired  as  a  hit  man  on  the  Cabazon  Res- 
ervation. In  that  case,  there  was,  in  fact,  an  overture  made,  a  per- 
son was  supposedly  hired  to  be  a  hit  man,  a  person  was  later  con- 
victed, but  it  had  nothing  to  do  with  Indian  gaming.  That  was  a 
private  domestic  dispute,  where  a  hit  man  was  hired  to  supposedly 
hit  somebody.  That  person  was  convicted,  served  his  time,  and  is 
now  back  out.  But  it  had  nothing  to  do  with  Indian  ganiing.  But 
we  will  provide  the  documentation  on  that  for  this  committee  lest 
this  committee  take  at  face  value  the  list  of  things  that  are  on  the 
list  of  22. 

[The  information  follows:] 


311 


.*A^-. 


October  14,  1993 


The  Honorable  Bill  Richardson 

Chairman 

Subcommittee  on  Native  American  Affairs 

Committee  on  Natural  Resources 

1522  Longworth  Building 

U.S.  House  of  Representatives 

Washington,  DC  20515 

Dear  Mr.  Chairman: 

On  October  5,  1993,  Representative  Robert  Torricelli  appeared  before 
the  Subcommittee  on  Native  American  Affairs  to  introduce  and  laud  Donald 
Tnjmp.  In  his  prepared  statement,  Representative  Torricelli  slandered  and  de- 
famed the  entire  Indian  gaming  industry  by  alleging  widespread  fraud,  abuse 
and  organized  crime  infiltration.  Despite  the  testimony  of  the  United  States 
Department  of  Justice  that 

the  belief  held  by  some  that  Indian  gaming  operations  are  rife  with 
serious  criminality  is  not  established  by  the  data  currently  available, 

and  that 

The  Department  of  Justice  believes  that  to  date  there  has  not  been  a 
widespread  or  successful  effort  by  organized  crime  to  infiltrate  Indian 
gaming  operations, 

Mr.  Torricelli  attached  to  his  statement  a  list  of  newspaper  reports  that  he  de- 
scribed as  "22  specific  examples  of  organized  crime  infiltration  or  cornjption  in 
tribal  gaming  that  have  been  reported  in  the  media." 

Because  three  of  these  "examples"  referred  to  the  Cabazon  Band  of 
Mission  Indians,  we  feel  obligated  to  respond  to  Representative  Torricelli's 
statement,  and  repectfully  request  that  this  letter  be  included  as  part  of  the 
official  hearing  record. 

First,  the  statement  alleges  that  the  "Cabazon  tribe  (sic)  in  California 
hired  a  member  of  a  local  crime  syndicate  to  run  its  casino."  This  statement  is 


^i^^t^^T^aJ^d^^t^^MhWt^TMh!^ 


84-245  INDIO  SPRINGS  DRIVE  □  INDIO,  CALIFORNIA  92201-3405  □  (619)  342-2593  o  FAX  (619)  347-7880 


312 


false.  In  1980,  when  the  Cabazon  Band  originally  opened  its  first  card  room,  it 
sought  recommendations  for  a  manager  from  a  variety  of  sources.  Leo 
Durocher,  the  famous  baseball  player  and  manager,  recommended  Rocco 
Zangari  to  the  Cabazon  Band  and  Mr.  Zangari  was  hired  for  that  position.  Less 
than  a  year  later,  in  1981,  newspaper  stories  appeared  alleging  that  Mr. 
Zangari's  brother,  a  prominent  Palm  Springs  restaurateur,  had  some  connec- 
tion with  persons  reported  to  be  associated  with  organized  crime  in 
Philadelphia.  As  the  result  of  these  allegations,  Mr.  Zangari  was  summarily 
fired  by  the  Cabazon  Band  and  has  had  nothing  to  do  with  the  Cabazon  Band 
or  its  gaming  activities  for  more  than  12  years. 

Next,  the  Torricelli  statement  claims  that  "a  tribal  official  who  accused  the 
manager  of  skimming  profits  later  was  forced  out  of  office  and  found  dead  two 
months  later.  While  the  case  has  not  been  solved,  investigators  believe  that  the 
murder  was  mob  related."  Once  again,  Mr.  Torricelli's  sensationalized  account 
bears  little  resemblance  to  the  truth.  Fred  Alvarez,  the  tribal  member  referred  to, 
served  one  four-year  term  on  the  Cabazon  Business  Committee.  However,  in 
June,  1981,  Mr.  Alvarez  was  defeated  for  reelection  (not  "forced  out  of  office") 
because  of  his  increasingly  erratic  behavior.  This  behavior  included  seeking 
tribal  permission  to  grow  marijuana  on  his  tribal  allotment  and  his  increasing 
association  with  local  motorcycle  gangs.  A  month  later,  Mr.  Alvarez  and  two 
non-Indian  Companions  were  shot  to  death  in  his  home  some  distance  from  the 
Cabazon  Reservation.  Despite  the  full  cooperation  of  the  Cabazon  Band,  the 
murders  have  never  been  solved  and  we  are  unaware  of  any  evidence  that  they 
were  either  "mob-related"  or  in  any  way  related  to  his  tribal  affiliation. 

Finally,  Mr.  Torricelli  makes  reference  to  the  fact  that  in  1985,  a  non-tribal 
employee  pleaded  guilty  and  was  sentenced  to  four  years  in  prison  for  attempt- 
ing to  hire  a  person  to  murder  the  people  supplying  drugs  to  his  girifriend.  This 
incident,  while  extremely  unfortunate,  was  a  personal  matter  and  had  nothing 
whatsoever  to  do  with  the  Cabazon  Band  or  its  gaming  activities.  As  a  result, 
and  contrary  to  Mr.  Torricelli's  allegations,  this  incident  is  not  "an  example  of  or- 
ganized crime  infiltration  or  corruption  in  tribal  gaming"  and  further  demon- 
strates the  lack  of  substance  to  the  Torricelli  statement. 

In  summary,  the  Cabazon  Band  is  proud  of  its  gaming  activities.  They 
are  well-run,  honest,  heavily  regulated  and  have  provided  the  tribe  with  a  much- 
needed  source  of  tribal  revenues  and  employment.  Virtually  all  of  the  progress 
we  have  made  over  the  last  thirteen  years  is  directly  attributable  to  our  tribal 
gaming  enterprise. 

Finally,  we  would  remind  the  Subcommittee  and  Mr.  Torricelli  that  the 
Cabazon  Band  fought  for  seven  years,  all  the  way  to  the  United  States 
Supreme  Court,  to  establish  the  right  of  Indian  tribes  to  conduct  gaming  activi- 
ties on  their  reservations.  Throughout  that  long  fight,  the  State  of  California 
never  once  alleged  any  organized  crime  infiltration  on  the  Cabazon 
Reservation. 

Not  only  were  there  no  such  allegations  in  the  Cabazon  litigation,  the 
Ninth  Circuit  Court  of  Appeals  specifically  noted  that  while  keeping  criminals  out 
of  Indian  gaming  was  a  legitimate  concern,  "there  is  no  evidence  whatsoever 
that  organized  crime  exists  on  these  [Cabazon  and  Morongo]  Indian  reserva- 
tions." Cabazon  Band  of  Mission  Indians  v.  Countv  of  Riverside  ,  783  F.2d  900, 
904  (9th  Cir,  1986).   The  United  States  Supreme  Court  reached  the  same  con- 


:!^^ti^^iM!dJ^j^^:t^^^i^Mt^^T^!d::)^ 


313 


elusion:  "California  does  not  allege  any  present  criminal  involvement  in  the 
Cabazon  or  Morongo  enterprises,  and  the  Ninth  Circuit  discerned  none." 
California  v.  Cabazon  Band  of  Mission  Indians.  480  U.S.  202.  221  (1987) . 

In  light  of  these  facts  and  the  recent  Justice  Department  testimony,  Mr. 
Torricelli's  statement  should  be  seen  for  what  it  is:  a  shameless  attempt  by  the 
sponsor  of  the  "Donald  Trump  Protection  Act"  to  eliminate  competition  and  to 
deprive  tribal  governments  of  the  only  economic  development  tool  ever  to  suc- 
ceed in  creating  tribal  self-sufficiency. 


Sincerely, 

John  A.  James  (y 
Tribal  Chairperson 


JAJ/saw 


y^^^/my^^^!:y^!^M^/md^M^MY/M^ 


314 

Mr.  Wapato.  I  would  also  like  to  indicate,  I  think  it  is  very  clear 
and  I  think  it  came  out  very  quickly,  Mr.  Trump  cut  to  the  chase. 
The  real  issue  here  is  economic  competition.  It  is  not  organized 
crime.  It  is  not  infiltration. 

There  has  been  only  one  documented  case  of  organized  crime, 
and  that  one  resulted  in  a  successful  prosecution.  It  is  very  clear 
that  what  is  being  proposed  would  restrict  Indian  gaming,  it  would 
propose  to  treat  Indian  gaming  as  New  Jersey  gaming,  commercial 
gaming. 

Indian  gaming  is  not  commercial  gaming,  it  is  governmental 
gaming.  If  it  is  to  be  equated  with  any  gaming  it  has  to  be  equated 
with  a  State  lottery,  40  States  of  which  now  have  State  lottery. 

It  is  a  revenue-producing  mechanism  for  Indian  tribes  as  opposed 
to  a  profit-making  enterprise  by  Indian  tribes.  There  is  a  big  dif- 
ference between  revenue  production  and  profit. 

Nobody  on  this  committee  or  elsewhere  suggests  that  State  lot- 
teries should  be  taxed  because  they  are  governmental.  And  it  is  the 
same  thing  that  Indian  gaming  is,  I  think  it  is  very  clear 

Mr.  Abercrombie.  Mr.  Wapato 

Mr.  Wapato.  May  I  finish  my  thought? 

Mr.  Abercrombie.  Very  well. 

Mr.  Wapato.  The  organized  crime  allegations  that  organized 
crime  is  going  to  lead  to  the  destruction  of  the  culture  on  Indian 
reservations,  that  tribes  will  be  victimized  by  organized  crime  are 
the  furthest  from  the  truth.  Marge  Anderson  and  the  people  that 
built  the  school  in  Mille  Lacs  with  their  gaming  proceeds,  have  at 
the  heart  of  their  matter,  the  utmost  concern  for  the  tribal  mem- 
bers and  for  the  future. 

If  we  will  be  victimized  by  anjrthing,  we  will  be  victimized  if  the 
Donald  Trump  Protection  Act  is  passed. 

Thank  you. 

[Prepared  statement  of  Mr.  Wapato  follows:! 


315 


STATEMENT 
OF 

TIMOTHY  WAPATO 


EXECxrrivE  director 

NATIONAL  INDIAN  GAMING  ASSOCIATION 


BEFORE 

THE 

HOUSE  NATURAL  RESOURCES  COMMITTEE 
SXreCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 
CONCERNING 
THE 
INDIAN  GAMING  REGULATORY  ACT 


ON 


OCTOBER  5,  1993 


316 


STATEMENT  OF  TIMOTHY  WAPATO 
EXECUTIVE  DIRECTOR 
NATIONAL  INDIAN  GAMING  ASSOCIATION 
BEFORE  THE  SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 
COMMITTEE  ON  NATURAL  RESOtTOCES 
U.S.  HOUSE  OF  REPRESENTATIVES 

October  5,  1993 


Mr.  Chairman,  my  name  is  Tim  Wapato,  Executive  Director  of 
the  National  Indian  Gaming  Association.   I  appreciate  the 
opportunity  to  appear  before  this  Subcommittee  to  testify  on  the 
issue  of  law  enforcement  regarding  Indian  gaming. 

As  you  may  be  aware,  prior  to  serving  as  the  Executive 
Director  of  the  National  Indian  Gaming  Association,  I  have  worked 
in  various  high-level  positions  with  the  Los  Angeles  Police 
Department,  including  Lieutenant-in-Charge  of  a  special 
investigative  team,  investigating  robbery,  homicide,  vice,  and 
narcotics.   I  retired  in  1979  after  21  years  of  service.   LAPD 
loaned  my  services  to  the  Colville  Tribe  of  Washington  to  assist 
them  in  establishing  its  police  department  in  Nespelem, 
Washington.   Recently,  I  have  worked  with  the  Sycuan  Tribe  of 
California  and  its  Gaming  Commission  to  bring  its  police 
department  and  gaming  security  into  compliance  with  the  Indian 
Gaming  Regulatory  Act. 

I  mention  all  of  this  because  I  believe  that  my  past 
experience  in  law  enforcement  and  my  recent  experience  in  Indian 
gaming  gives  me  the  background  and  knowledge  to  provide  the 
subcommittee  with  a  professional  opinion  of  the  Indian  gaming 
industry's  law  enforcement  and  security  status.   I  can  tell  you 
that  no  other  economic  activity  in  this  country  has  more  layers 
of  regulation  specifically  devoted  to  protecting  against  the 
influence  of  organized  crime. 

NIGA  is  a  nonprofit  organization  working  to  protect  tribal 
sovereignty  and  to  promote  tribal  economic  development  through 
gaming  enterprises.   It  also  serves  to  provide  technical 
assistance  to  its  member  tribes  on  gaming  issues,  including  law 
enforcement  and  security.   The  elected  officers  are  Richard  G. 
Hill,  Chairman;  Daniel  Tucker,  Vice  Chairman;  Jacob  Viarrial, 
Secretary;  and  Nathan  Small,  Treasurer.   I  am  pleased  to  be  here 
on  behalf  of  our  membership  which  represents  95  sovereign 
governments . 

Mr.  Chairman,  in  1988,  against  the  wishes  of  tribes  across 
the  nation,  the  non-Indian  gaming  industry  with  the  active 
support  of  state  government  officials  fought  for,  and  secured, 
the  enactment  of  the  Indian  Gaming  Regulatory  Act.   This  Act  not 
only  did  not  authorize  or  permit  Indian  tribes  to  engage  in 
gaming,  but,  in  fact,  limited  tribal  sovereignty  in  this  area  as 


317 


confirmed  in  the  Supreme  Court's  decision  in  the  Cabazon  case. 

Despite  this  loss  in  tribal  sovereignty  and  control  over 
economic  operations,  tribes  were  successful  in  making  gaming  a 
significant  economic  development  tool.   While  Indian  gaming  is 
only  about  3%  of  the  United  States  gaming  market,  net  tribal 
proceeds  from  such  activity  have  been  used  for  tribal  government 
services  such  as  sewer  and  water  systems,  schools,  roads, 
medical  facilities,  and  similar  services.   Even  with  the 
documented  beneficial  impact  of  Indian  gaming  on  Indian  and 
non-Indian  people,  we  once  again  are  faced  with  the  threat  from  a 
small  nximber  of  individuals  on  the  Federal  and  state  level,  in 
concert  with  representatives  of  the  non-Indian  gaming  industry, 
to  further  erode  tribal  sovereignty  by  anti-Indian  amendments  to 
IGRA. 

These  individuals  have  asserted,  but  never  supported  with 
facts,  that  the  Indian  gaming  industry  is  largely  unregulated, 
and  is  crime  ridden.   I  am  here  to  discuss  the  tribal  gaming 
regulatory  mechanisms  currently  in  force  under  the  1988  Indian 
Gaming  Regulatory  Act.   I  would  like  to  emphasize  two  points. 
First,  I  would  like  to  point  out  the  sovereign  right  and  duty  of 
Indian  tribes  to  protect  their  membership.   Second,  I  will 
provide  an  outline  of  the  levels  of  enforcement  and  regulations 
by  which  tribal  gaming  operations  must  abide.  I  believe  that  you 
will  see  that  not  only  is  the  Indian  gaming  industry  well  run  and 
well  regulated,  but  that  it  is  more  heavily  regulated  and  more 
closely  watched  than  e'ither  the  state  or  charitable  gaming 
industries  combined. 

I.  TRIBAL  SOVEREIGNTY  AMD  THE  PROTECTION  OF  TRIBAL  MEMBERS 

The  significance  of  the  powers  held  by  federally  recognized 
tribes  was  set  out  in  the  1831  Supreme  Court  case,  Cherokee 
Nation  v. Georgia.   In  that  case.  Chief  Justice  Marshall  described 
the  status  of  Native  American  tribes  as  "...domestic 
dependent  nations...".   This  status  gives  rise  to  the  existence 
of  a  government-to-government  relationship  between  the  tribal 
governments  of  American  Indians  and  the  federal  government  of  the 
United  States.   This  relationship  has  been  recognized  at  the 
conception  of  the  United  States,  and  continues  to  be  recognized 
today.   Tribes  are  recognized  as  sovereign  entities,  with  powers 
of  self-government  over  their  members  and  over  activities  taking 
place  within  their  territory.  Included  within  these  powers  is  the 
right  to  initiate  economic  development  programs,  like  gaming 
operations,  to  protect  their  membership  from  poverty  and  economic 
devastation. 

In  California  v.  Cabazon  (1987),  the  Supreme  Court  upheld 
the  right  of  tribes  as  sovereign  nations  to  conduct  gaming  on 
Indian  lands  free  of  state  control  as  long  as  similar  gaming  was 
permitted  by  the  state  outside  the  reservation  for  any  purpose. 
This  sovereignty  was  further  recognized  -  while  at  the  same  time 
infringed  upon  -  by  the  Indian  Gaming  Regulatory  Act  passed  by 


84-760  O  -  94  -  1 1 


318 


Congress  in  1988.   The  Act  affirms  that  tribes  has  the  power  to 
conduct  gaining  on  Indian  lands  but  it  gives  states  the  ability  to 
regulate  the  gaming  through  the  signing  of  tribal/state  compacts. 

Within  the  scope  of  IGRA,  tribes  have  the  opportunity  and 
right  to  generate  revenue  for  tribal  government  operations  and 
programs  for  gaming  operations,  just  as  state  governments  have 
the  right  to  conduct  state  lotteries  to  generate  revenue  for 
their  operations  and  programs.   Proposed  amendments  to  IGRA  from 
anti-Indian  gaming  forces  would  further  reduce  tribal  powers  of 
self-government  and  proposed  amendments  would  lessen  and  cheapen 
the  government-to-government  relationship  between  tribes  and  the 
Federal  government . 

II.   Regulatory  Powers  Governing  the  Inditui  Gaming  Industry 

The  Indian  gaming  industry  is  subject  to  regulation  and 
enforcement  at  four  levels  of  government.   The  first  and  most 
important,  is  the  regulatory  powers  of  the  tribes  themselves. 

Tribal  Government  Regulation: 

The  tribes,  as  domestic  sovereigns,  adopt  and  enforce  their 
own  laws,  ordinances,  policies  and  codes  for  gaming  operations  on 
their  lands.   Under  those  regulatory  schemes,  tribes  have 
established  their  own  gaming  boards  or  commissions  to  enforce 
gaming  laws;  developed  and  directed  tribal  police  departments; 
and  employed  their  own  surveillance  and  security  systems  for 
their  casinos  and  other  gaming  facilities.   Training  for  key 
tribal  gaming  employees  is  contracted  or  provided  through  college 
courses.   State-of-the-art  security  cameras,  surveilleince, 
controls,  cuinual  outside  audits,  and  accounting  systems  are 
utilized  by  the  tribes. 

Many  of  the  regulatory  requirements  adopted  by  the  tribes  as 
a  part  of  their  own  code  are  memdated  by  IGRA  itself.  And  because 
gcuning  tribes  rely  heavily  upon  gaming  revenues,  they 
have  an  added  incentive  to  keep  operations  running  smoothly  and 
crime  free.   The  Sycuan  tribe  of  California,  for  instance,  has 
ordinances  imposing  such  thorough  application  process,  that  the 
application  for  employment  is  16  pages  long.  [See  Attached]  As 
noted,  the  tribal  regulatory  system  includes  extensive 
surveillance  and  security  measures.   For  instance,  in  fiscal  year 
1993,  the  Oneida  Tribe  of  Wisconsin  spent  $6,166,451  on  its 
surveillance  and  security  system,  with  another  $2,000,000  for 
security  equipment.   In  addition,  under  the  IGRA,  all  key 
employees  are  subject  to  extensive  background  checks,  including 
fingerprinting,  prior  employment  and  criminal  record  checks. 
Please  note,  most  tribes  have  chosen  to  fingerprint  100%  of  their 
personnel . 


319 


Tribal/state  Compacts: 

The  second  level  of  law  enforcement  and  regulation  of  Indian 
Class  III  gaining  is  imposed  through  the  Compact  between  a  Tribe 
and  a  State.  Because  of  IGRA  requirements,  Class  III  Indian 
gaming  may  only  be  conducted  under  a  compact  negotiated  between 
the  tribe  and  the  state.   Through  these  contracts,  states  are 
able  to  impose  a  considerable  portion  of  their  own  regulatory 
requirements  on  Indian  gaming.   These  provisions  may  include  the 
allocation  of  criminal  and  civil  jurisdiction  over  such 
operations  between  the  tribe  and  the  state;  imposition  of  state 
licensing  and  permitting  requirements;  state  regulatory  and 
inspection;  state  employment  requirements;  and  cost-sharing  to 
defray  regulatory  costs.   Such  state  regulatory  oversight  is 
often  an  addition  to  stringent  tribal  regulation  imposed  by 
tribal  gaming  authorities.   In  Arizona,  for  example,  which  has 
thirteen  compacts  approved  by  the  Secretary  of  the  Interior,  the 
compacts  allow  the  state  extensive  law  enforcement  regulatory 
powers  over  tribes.   In  Arizona,  the  state  must,  among  other 
things,  certify  all  non-tribal  applicants  for  employment,  all 
providers  of  gaming  services,  all  management  contractors  and/or 
financiers,  and  all  individuals  or  entities  which  have  any 
connection  to  a  gaming  facility.   The  standards  for  state 
certification  are  extremely  rigorous,  including  thirteen  separate 
criteria  specifically  designed  to  root  out  organized  crime 
affiliations  or  connections.   As  long  as  the  states  bargain  in 
good  faith,  they  are  able,  through  the  compacting  process,  to 
impose  significant  parts  of  their  own  laws  upon  Indian  gaming. 
You  can  see,  Mr.  Chairman,  why  the  tribes  have  always  asserted 
that  IGRA  was  an  erosion  of  tribal  sovereignty. 

National  Indian  Gaming  Commission: 

The  third  level  of  regulation  over  Indian  gaming  is  through 
the  National  Indian  Gaming  Commission.   The  Commission,  in 
carrying  out  its  regulatory  responsibilities  under  IGRA,  oversees 
Class  II  gaming  and,  to  some  extent,  Class  III  gaming  and 
implements  its  duties  through  regional  regulators  and  management 
contractor  monitoring.   The  regulatory  requirements  of  IGRA  which 
the  Commission  must  implement,  particularly  over  Class  II  gaming, 
are  extensive.   They  include  annual  outside  audits  on  all  gaming 
activities  including  contracts  for  supplies,  services,  and 
concessions;  requirements  for  provisions  to  protect  the 
environment  and  public  health  and  safety;  extensive  requirements 
for  background  investigations  of  key  officials  and  employees 
involved  in  gaming  operations  and  the  oversight  of  such  officials 
and  employees  on  a  continuing  basis;  and  licensing  requirements. 

The  tribes  are  also  regulated  as  to  how  the  net  revenues 
from  gaming  operations  may  be  spent.  Net  revenues  may  not  be 
spent  for  any  other  purpose  than  to  fund  tribal  governmental 
operations  or  programs;  to  provide  for  the  general  welfare  of  the 
tribe  and  its  members;  to  promote  tribal  economic  development;  to 
donate  to  charitable  organizations;  or  to  fund  local  government 
agencies . 


320 


Even  where  tribes  are  eligible  for  self-regulation  under  a 
Class  II  operation,  they  are  still  subject  to  strict  scrutiny  by 
the  Commission.   Before  being  granted  that  status,  they  must 
demonstrate  that  they  are  conducting  their  activities  in  a  manner 
which  has  resulted  in  an  effective  and  honest  accounting  of  all 
revenues;  a  reputation  for  safe,  fair,  and  honest  operations;  and 
evidence  that  their  operation  has  been  generally  free  of  criminal 
or  dishonest  activity.   They  must  also  show  that  they  have 
adopted  and  are  implementing  adequate  systems  for  the 
investigation,  licensing,  and  monitoring  of  all  employees  of  the 
operation,  as  well  as  the  investigation,  enforcement  and 
prosecution  of  violations  of  its  gaming  ordinances  and 
regulations.   They  also  must  show  that  they  have  conducted  the 
operations  on  a  fiscally  and  economically  sound  basis.   Even 
under  self -regulation,  the  tribal  audit,  employment  checks,  and 
other  regulations  remain  subject  to  Commission  oversight. 

Federal  Entitles: 

The  fourth  level  of  regulation  of  Indian  gaming  comes  from 
several  other  Federal  agencies.   The  FBI  continues  to  have  its 
duty  and  authority  to  investigate  crimes  on  Indian  reservations 
in  those  states  which  do  not  have  criminal  jurisdiction  over 
Indian  reservation  under  P.L.  83-280.   These  include  the 
responsibility  to  investigate  general  crimes  in  non-280  states 
and,  in  all  states,  criminal  violations  of  gaming  laws  under 
IGRA.   The  Bureau  of  Indian  Affairs  also  has  the  capability  and 
authority  to  investigate  crimes  on  Indian  reservations  and 
maintains  a  force  of  police  officers  on  many  Indian  reservations 
and  in  regional  offices.   In  addition,  the  BIA  has  specific 
regulatory  responsibilities  under  IGRA,  such  as  approval  of 
Tribal-State  Compacts.   The  Internal  Revenue  Service  also  plays  a 
role  in  applying  Federal  income  and  other  tax  laws  to  tribal 
gaming  operations.   Finally,  the  Justice  Department,  acting  in 
most  cases  through  the  several  offices  of  the  U.  S.  Attorney,  has 
the  responsibility  for  the  enforcement  and  prosecution  of  crimes 
on  Indian  reservations,  including  general  and  specific  crimes 
arising  out  of  Indian  gaming. 

Mr.  Chairman,  it  is  the  position  of  the  National  Indian 
Gaming  Association,  that  the  Indian  gaming  industry  is  well,  if 
not  overly,  regulated  through  these  four  levels  of  government. 
Allegations  coming  forth  from  individuals  asserting  that  Indian 
casinos  are  "fronts"  for  organized  crime  are  simply  a  smoke- 
screen to  cover  their  real  aim  -  which  is  to  eliminate  Indian 
gaming  as  competition  to  commercial  non-Indian  gaming.   Such 
opposition  is  clearly  economic  racism  and  Congress  must  not  allow 
itself  to  be  used  to  implement  the  racist  agenda  of  a  few  greedy 
commercial  gaming  tycoons.   We  urge  you  to  protect  our  remaining 
tribal  sovereignty  in  this  area,  and  our  economic  well-being,  by 
strongly  opposing  the  anti-Indian  gaming  cimendment  to  IGRA 
emanating  from  those  sources. 

This  completes  my  testimony,  Mr.  Chairman,  and  I  am 
available  for  any  questions  the  Subcommittee  members  may  have. 


321 


aij^i^^^!" 


Sycuan  ^ and  of  Mission  Indians 


AUTHORIZATION    TO    RELEASE    INFORMATION 
NAME: 

Last  First  Middle 

OTHER  NAMES; 

(Aka's,  prior  marriages,  maiden  names) 

DATE  OF  BIRTH: SOCIAL  SECURITY  § 


POSITION  APPLYING  FOR: 


To  Whom  It  May  Concern: 

I  respectfully  request  and  authorize  you  to  permit  the  Sycuan  Band 
of  Mission  Indians,  Sycuan  Tribal  Police  and  their  agents  to  review 
my  credit  record,  juvenile  or  adult  probation  record,  medical 
record,  military,  academic,  financial  records  and  employment 
record;  including  but  not  limited  to  personnel  files,  background 
files,  internal  investigation  files  and  training  files.  They  are 
also  authorized  to  copy  any  material  contained  therein. 

I  hereby  release  you,  your  organization,  or  others  from  any 
liability  or  damage  which  may  result  from  furnishing  the  requested 
information. 

A  photocopy  or  facsimile  of  this  release  form  will  be  valid  as  an 
original  thereof,  even  though  said  copy  does  not  contain  an 
original  writing  of  my  signature.  The  original  of  this  form  is 
maintained  at  the  Sycuan  Human  Resources  Department  and  will  be 
made  available  upon  request. 

The  information  is  to  be  used  to  assist  the  Sycuan  Band  of  Mission 
Indians  in  determining  my  fitness  and  qualifications  for  a  position 
of  trust  and  responsibility. 

This  release  will  expire  one  year  after  the  date  signed. 

Signature: 

Date : 


5459  DEHESA  ROAD  •  EL  CAJON,  CALIFORNIA  92019  •  (619)  445-0109/0118  •  FAX  (619)  445-1927 


322 


F.B.I.  INFORMATION  AND 
CONSENT  FOR  DRUG  TESTING 


1.  NAME: OTHER  NAMES  USED: 

2.  PRESENT  STREET  ADDRESS: 


CITY: STATE: ZIP  CODE: 

3.  DATE  OF  BIRTH: SEX: 

4.  PLACE  OF  BIRTH  (CITY,  STATE): 


5.  RACE: TRIBAL  AFFILIATION/NUMBER:. 

6.  PREVIOUS  ADDRESS: 


7.    DRIVER'S  LICENSE: SOCIAL  SECURITY: 


8.    HAVE  YOU  EVER  BEEN  ARRESTED  OR  CONVICTED  OR  ANY  OFFENSE  OTHER 
THAN  A  MINOR  TRAFFIC  VIOLATION?     YES  NO  

IF  YOU  HAVE  ANSWERED  YES  TO  QUESTION  #8,  FILL  IN  THE  FOLLOWING 
INFORMATION  FOR  EACH  OFFENSE.  (USE  OTHER  SIDE  OF  THIS  PAGE  IF 
NECESSARY) . 

DATE  OFFENSE         LOCATION  DISPOSITION 


(A)  I, HEREBY  AUTHORIZE  THE  SYCUAN  BAND  OF 

MISSION  INDIANS  HUMAN  RESOURCES  DIRECTOR  OR  DESIGNEE  TO  SEEK 
INFORMATION  ABOUT  ME  FROM  THE  FEDERAL  BUREAU  OF  INVESTIGATIONS  OR 
OTHER  SUCH  CLEARANCE  AGENCIES,  AND  I  GIVE  THEM  THE  RIGHT  TO  ACCESS 
ANY  AND  ALL  OF  MY  FILES  AND/OR  RECORDS  MAINTAINED  BY  THESE 
AGENCIES. 

(B)  I,_ HEREBY  AUTHORIZE  AND  GIVE  MY  CONSENT 

TO  BE  GIVEN  A  DRUG  TEST  AT  ANY  TIME  THE  TRIBE  DEEMS  IT  TO  BE 
NECESSARY.  I  AGREE  TO  BE  TESTED  BY  THE  DOCTOR  APPOINTED  BY  THE 
TRIBE  AND  I  FURTHER  AUTHORIZE  THE  DRUG  TEST  RESULTS  TO  BE 
DISSEMINATED  TO  THE  TRIBAL  COUNCIL  AND/OR  IT'S  DESIGNATES  FOR 
ADMINISTRATIVE  USE  AS  THEY  DEEM  NECESSARY. 

(C)  I, FURTHER  UNDERSTAND  THAT  SHOULD  THESE 

CLEARANCE  CHECKS  REVEAL  ANY  NEGATIVE  INFORMATION  AND/OR  IF  I  DO  NOT 
CONSENT  TO  THE  DRUG  TESTING,  I  SHALL  BE  SUBJECT  TO  IMMEDIATE 
DISMISSAL  AS  AN  EMPLOYEE  OF  THE  TRIBE  AND  IT'S  ENTERPRISES. 


SIGNATURE: DATE: 


323 


PRIVACY  ACT 


In  compliance  with  the  Privacy  Act  of  1974,  the  following 
information  is  provided: 

Solicitation  of  the  information  on  this  form  is  authorized  by  25 
use.  2701  et  seq.  The  purpose  of  the  requested  information  is  to 
determine  the  eligibility  of  individuals  to  be  employed  in  a  gaming 
operation.  The  information  will  be  used  by  National  Indian  Gaming 
Commission  members  and  staff  who  have  need  for  the  information  in 
the  performance  of  their  official  duties.  The  information  may  be 
disclosed  to  appropriate  federal.  Tribal,  State,  local,  or  foreign 
law  enforcement  and  regulatory  agencies  when  relevant  to  civil, 
criminal  or  regulatory  investigations  or  prosecutions  or  when 
pursuant  to  a  requirement  by  a  tribe  of  National  Indian  Gaming 
Commission  in  connection  with  hiring  or  firing  of  an  employee,  the 
issuance  or  revocation  of  a  gaming  license,  or  investigations  of 
activities  while  associated  with  a  tribe  or  a  gaming  operation. 
Failure  to  consent  to  the  disclosures  indicated  in  this  notice  will 
result  in  a  tribe's  being  unable  to  hire  you  in  a  primary 
management  official  or  key  employee  position. 

The  disclosure  of  you  Social  Security  Number(SSN)  is  voluntary. 
However,  failure  to  supply  a  SSN  may  result  in  errors  in  processing 
your  application. 


Applicant  name  (first  middle  last)  Please  Print 

Applicant  Signature 

Date 

Witness  name  (first  middle  last)  Please  Print 

Witness  Signature 

Date 

324 


$^m^^ 


Personal  History  Statement 


Tht  foUo'*->nfi  1 

formouon  is  rtq 

uejied  of  you  for  vtnficonon  and  contact  purpose 

1    Your  Name  (Ple»sepnm  or  tvpe)                                                                                                                                                                                                                          1 

Ust 

Fnt                                                                      Middle 

Other  ntmcs  (including  njcknamet)  you  hive  ui«d  or  been  known  by: 

2    Pleue  list  sour  curreni  residence  address 

Number                                    Street 

Clly 

^ 

Zip  Code 

3    Pleau  lilt  your  rcsidmcc  telephone  numbertt)  at 
which  you  can  be  conucied . 

(      ) 

(     ) 

Hn  you  can  be  contacted 

4    Birthdiie 

:    PltuofBmh 

6   Cituenihip 

7   Sex 

Month 

D.) 

Yeir 

Mile   □        Female    Q 

8    Soaj]  Secunr\  SumScr 

(In  Accordance  wrth  the  Ttdenl  Pnvtcy  Ad  of  1974,  disclo«UR  a  vohjntiry.  Tlw  SSN  wiJI  be  \aed  for 
identification  purpoici  to  ensure  IhAt  proper  ivcorda  art  obtained) 

9    For  ibe  purpoies  of  identificaiion.  please  proMde  the  followmR                                                                                                                                                                              1 

Height 

Weight 

Hair  Color 

Eye  Color 

%c»n,  Uioot,  or  other  distinguishing  marks 

All  languages  (spoken  or  wnnenj 

Relatives  and  References 

t 


Dunng  tht  course  of  the  background  invejngonon.  per  tons  whohtovyoti  wiU  b*  aikdd  to  comment  upon  yotir  tuitabttity  for  the  position  for 
M^tch  \-ou  have  applied  hpuines  will  be  confirmed  to  lob-relevani  moflers 

10   Please  iuppl>  the  appropriate  information  in  the  spaces  provided  below   Ifacalegory  btMappbcsble,  writcio"N/A.'                                                                          1 

If  li\inR.nameofvour 

AJdrctt  where  pcnon  can  be  oonadcd 
flnclude  Cttv.  Suu  and  Zin  Code) 

Telephone  aivrfiich 
Deraoncanbe  contacted 

Father 

OHome  ()  Work  ()  Other 

OHome  () Work () Other 

Mother 

OHoraeOWoAO  Other 

(  JHome  ()  Work  ()  Other 

FathcT'in-Liw 

(IHotne  ()  Work  ()  Other 

OHome  OWoAO  Other 

Mothcr-UHLaw 

OHane  ()  Work  ()  Other 

OHome  O  Work  O  Other 

Sfttue 

(  Wont.  ()  Work  ()  Other 

OHoii»0  Work  O  Other 

Fwrner  Spous<<i) 

OHotiK  OWoikOOther 

OHome  OWorkOOllier 

325 


Personal  History  Statement 


sKekfrves  and  References  Continued 


11.  PiMW  fiipply  tlM  appropritu  infonniiion  in  tbe  sp» 
If  livwB.  nime  of  your 

ce»  provided  below.  If  a  category  is  not  applicable,  wntt  l 
Address  where  person  can  be  c«citacled 
(Include  Citv.  Stale  and  Zio  Codel 

n-N/A." 

Telephone  at  which 

Br<ilha<i)anlSiaa<>) 

OHome  OWorkOOther 

OHome  OWorkOOther 

()Ho«  ()  Wort  {)  Other 

OHome  OWorkOOther 

OHome  OWoritOOlher 

OHome  OWorkOOther 

Sup-mothcr 

OHome  OWcHtOOaiei 

OHome  OWorkOOther 

SUftubcr 

OHome  OWofltOOlher 

OHome  OWorkOOther 

Sl«p-liroUia(s)  and  atp-5ina<s) 

OHome  OWorVOOlher 

OHoim  OWorkOOther 

OHome  O  Work  O  Other 

OHome  OWorkOOther 

Other  relatives  with  whom  vou  have  a  close  personal  relationship  (iiKluduiK  children)                                                                                                                                  I 

Relationship 

OHome  OWoikOOther 

OHome  OWorkOOther 

OHome  O  Work  O  Other 

OHome  OWorkOOther 

OHome  O  Work  O  Other 

OHome  OWorkOOther 

OHome  O  Work  O  Other 

OHome  OWorkOOther 

12.  Below,  please  list  those  indiMdui 

Is  with  whom  you  have  resided  during  the  Us  10  yean  (list  no  infonnalion  prior  to  your  15thbinhday).                                         j 

OHome  ()  Week  OOttKT 

OHome  OWorkOOther 

OHome  OWorttO  Other 

OHome  OWotkO  Other 

OHome  ()  Work  ()  Other 

OHome  OWorkOOther 

riHom,  MWnAriOlher 

OHome  OWorkOOther 

OHome  OWorkOOther 

326 


Personal  History  Statement 


.Rektives  and  References  Continued 

13    In  the  ipice  below,  plfcise  lifl  M  feterenctt  3-5  tnd 
cmploym   Includt  <m«  pmoMi  referoica  for  M£ 

Name 

viduilj  who  hive  knowledge  ol  you  in)  your  quuaicMiom   txciuoe  reiiuvei  aou  lornio 
h  period  ofrttidCTa  lined  in  uction  HU. 

Addreuwtierepenoocmliecoouaed                                                  Telephone  il  which 
(Include  Citv.Suleind  7.10  Codel                                                  oenon  c«n  be  conuaed 

OHom.  ()  Wo*  ()  Other 

OHomeOWofcO  Olher 

()Horne()WoA()Olher 

OHomeOWoikOOllier 

OHon^OWortiO  Other 

OHome  {)Wo»k()Olher 

OHome  ( )  Worlc  ( )  Olher 

OHonK  OWottcOOlher 

OHome  OWorkOOlher 

OHotne  ()  Work  ()  Olher 

liUC3tUHl 


14.  Indicale  your  cufTcru  educjtion  tchievemem  level 

n      I  possess  1  high  school  diploma  from  a  U.S  insunAion. 

Q      I  passed  the  GEO.  (General  Mucauonal  Developmenl)  lea. 

n      1  passed  the  California  High  School  Profiaency  Examinatioa 

n      I  possess  a  two-year  college  dcpcc 

Q      1  poaseB  a  four-year  college  or  university  depn 

[~|      I  do  not  csmwaly  have  a  high  school  diplonu  or  lU  enuivalera,  bu  I  plan  to  achieve  one 

When 

How: 

you  in  a  learning  environment  wiU  be  coi«acl«d  Armiewof  youradiooliacordaoiay  bemadeiooopiuaaknwithlhoaeconlactl. 

Namt  of  School 

Locanoo  of  School 
(CilyASliU) 

DauAncsdad 

SdnolRcfaona 
rTaaciMn,Coiaahn.e>c) 

From 
MonthTear 

To 
Month/Year 

327 


Personal  History  Statement 


JXiCation  :    continued 


16    Hive  you  ever  been  mspendtd  or  expelled  from  hi^'tc^ool  or  pofi-iecondiry  ichooP  (PoC-secondao'  schools  include  two  and  four-ycir 
colleges,  umversriies.  and  business  ind  vocalional  tchools  •  tny  fomul  education  beyond  the  high  school  level ) 


If  "yes,"  please  explain  {include  school,  date,  and  circumsunccs). 


iJReridwjce, 


!ndiwduob  M'>io  havt  become  acquainted  wtihyou  by  reason  of  your  re 
backeound  mvesngaliom 

siding  in  differen 

I  locotioni.  ore  a 

ften  helpful  in  providing  useftil  information  for  the 

17   Please  list  all  of  your  residence?  during  the  last  10  yean  (list  no  infonnaiion  prior  to  your  1 5lh  birthday).  Begin  with  your  mod  currem  residence. 

Address  of  Residence 

City.  Sute  &Zip  Code 

E>ates 

If  rented,  give  name  &  address  of  the  penon 
responsible  for  the  collection  of  rent 

From 
Monlh^ear 

To 
MoniWear 

Personal  History  Statement 


^Experience  imd  Employment 


IS    Beginnmg  with  yourmosi  oirrcni  anplo>TTwnt  or  bustnns  poi tiioa  held,  plusc  Itst  til  jobt  (including pan-Umctemponry,  uid  volunurv  positions) 
you  Kive  held  intheptst  10  ycATs    (For  the  purposo  of  thu  penona!  hjnory  suumenL,  volunteer  w(xk  should  be  UKluded  u  eniployrnenL)  for 
idneiificition  vtd  venfi&thon,  pleue  indicate  the  nature  of  (he  activity,  i  e..  fut1>tm>e.  pan-tune,  or  votuntar>    If  you  have  had  intervening  periods  or 
Rulitam  service  or  unemployment,  pleau  list  those  pcnods  in  sequence  tn  the  spaces  provided    Also  include  all  ownership  mtertfis  in  those 
businesses 


n«l«Kftffmnlo^-mwi1 


K»mf  »r^  %AAr^^  »f  ^mplnvw 


\«mgnfmpw-n<ftf 


Naines(s)  of  c(KworkeT<s) 


Title  or  duties  (for  idemificauon  purposes) 


Reason  for  leaving 


,yYr         |t„     I       MoyVr 


nmnnfrmnlroTTimi 


Nnmr  anil  fliirtrra  nf  rmnlnir 


N«mf  nf;irp>rvi.nr 


N*nies<s)  of  co-worlterls) 


TiUe  or  dunes  (for  idenuficalion  purposes) 


Reason  for  Iej\-ing 


' /^'         I  To     I       '^V' 


Half^nf  rmplni.Tnfni 


r^'jimf  «fi.j  \^(*r^^  nf  ^mplrtytT 


\xmfnffiupfT\-,i.r,r 


Reason  for  leavmg 


n.t^  ,^f -mplovmfni 


Mo     Yr 


Names(s)  of  ctywortter^s) 


Title  or  duties  (for  identificalion  purposes) 


,/Yr         |t,     I       MTyY 


N>"^  ^p^  r,^'*'^^  "^■•^TT'iyn 


N»m/-nfcip<.TVi«/^r 


N«dm(s)  ofc^-wcrkeits) 


Title  or  duties  (for  ideniificaiion  pwpoKs) 


n  vo 


Reason  for  leaving 


|Fn„.|        ""V"         |to     j       Mo  77 


329 

Personal  Histoiy  Statement 
Sxperienc^  and  Employment ,_  Conunued 


19   Would  Any  problem  rcwtiifyourpr«Mracntp)oyawuconUcleddunng  the  counc  of  the  background  investigition? 
If  *no'  when  ihould  such  conlict  be  mide'^ 


20.  If  you  hive  h*d  oo  prior  emptoymem,  pleue  cxpltin  in  the  ip«cc  below. 


2 1  -  Have  you  hid  tny  extended  work  ibsencet  for  reisons  other  than  eanted  vacaiioni?     Q    y  PI 

lf"yci,'  Please  eiqilain  (include  wtKn,  name  of  empoyer.  why). 


33.  Have  you  ever  been  fired  or  asked  to  resign  firom  any  place  of  employmeni''      n    „  n 

If  "yea,"  picaac  give  deuiU  (include  when,  where,  circunmanccs) 


33.  Have  you  cw  been  a  tuoccssful  or  unsucccnfiil  candidate  for  another  positioo  tn  mdiao  gaming  or  the  gaining  induttry  in  gOMnt?       n 
If 'yti.*  pkax  give  detub  (include  wfwn,  name  of  tn*bc  or  butmeaa,  cvcumiuaoca). 


330 


Personal  Histoiy  Statement 


Pxperi«nc«  «t)d  Enfiloyment  _ 


24.  Bepnniiig  with  Ihe  mofl  cuirenl,  list  my  exifiing  ind  previous  businea  rtUtionhipi  with  Indian  thba.  including  ownenhip  imerat  in  thoie  buiincncs. 


N.m.ofj 


n.i^nf^mnto^intnl 


Ki.n..  ..vH  .Mr^  nt  .trnilfJ^T* 


From  To 

Mo.    Yr  Mo.   Yr. 


Titk  or  duties  (for  idcnuioauon  puipoMi) 


Ntina(s)  orocMworkcf<i) 


,/Yr        [to     I       MoyYr 


n.i><nf,.mr.lnvTTi«il 


^■■.^*  .^  .A4r«.  f,f  ^mplnv>T 


Title  or  duties  (for  idenuficaljon  purposes) 


NuMS(t)  of  co>workef<s) 


Reuon  for  leaving 


>/""        I  To     I      '^V^' 


n.t«^f-mplnvw^l 


^^^»  ,r^  ,AAr^  ^f  ^mr.lnv>T 


Tiik  or  duties  (for  identificuion  purptnes) 


Nama<i)  of  ccKwortcer<t) 


Ifh^I         M0./Y,.        |t„     I       Mo/yT 


n.l-nf.mplm»n.nl 


M.~  .~<  .A4~.  „f-^lnv» 


M.m.  Af  ^,p.rv.cnf 


Title  or  dutio  (for  idemScaucn  pupoMt) 


NBniei<i)  of  oo-woriteKs) 


./Yr         It,     I       ^^ 


331 


Personal  History  Statement 


:Experienc«  and  Employment 


35.  Bcgiming  with  the  nwa  recent,  lid  any  tnd  all  pervious  busincs  reUlionshjps  wnh  the  gamijig  industry  genermlly.  iiKluding  mlcrtMs  m  those  businesses- 


Mmin»  .n/<  .HA^.  nf  .mplnvrr 


n.i>.nf>tnnln%Tiin 


^  FuU-linie 
^  Psn-time 
'-'    Volm««y 


Title  or  duties  (for  idcittificaliori  puposa) 


Ntinei(s)  of  co-workerts) 


Reason  for  leaving 


iFro-   I         M°/Y'        |To     I      M<^77 


n.1^  Af  ..^Invm.^ 


V..~  .~<  ./M,^  nf  ..rmlnv^ 


V.m.nfn.n.,^To, 


tJ  FulUime 
*— '  Part-time 
D    Voluntary 


Title  or  duties  (for  Hjcmification  pwposcs) 


Naines(s)  of  co-wQrlcef<s) 


Reason  lor  leaving 


[From   I         >*'/'<'        |to     |      Mo.  yvT 


n.1-  ,.f-,^lnVTn«.il 


M.~  .~<  .Ah.^  .sf-^lA.-. 


Mo     Vr.  Mo    Yr 


Title  or  duties  (for  identifictfioo  purpoacs) 


NaiiMS(s)  of  co-workcr(s) 


|Fn»  I        ^  /"        |to     I      >^/~ 


J^BauUDBlOBBIL. 


.^iMDLJB^tUtautapJflasL. 


Yr.  Mo.   Yr. 


Rmmq  far  leaving 


Tak  or  duiiaa  ((or  idoaifialica  pupoiaa) 


NaD(i(t)  orc<Hinr<ur(s) 


V^'      |To    I     "iS^ 


332 


Personal  History  Statement 


!xp<drtenc«  «nd  Employment 


26    Lixl  the  fume  ind  ■ddress  of  any  licensing  or  regulalvy  agency  with  which  you  have  filed  an  appliouon  Tor  a  Uccme  or  peniul  rclal«d  to  gaming  whether  or 
fMt  Mich  licerac  or  permit  was  granted  Also  include  the  dau  the  KfpUaCMa  was  filed. 


^Z^^SSS^S^jj^^^ 


M.mf  nfti 


"""  "'  """I" 


Title  or  duties  (for  identifecftioo  putpoMS) 


NaiBa(s)  of  cD-worfcott) 


|Fn«.  I      ^oy^'      I  To    I     "°7^ 


g    v^.i.- 


n.t><»f^TT^plovmwit 


W.»^  »rA  ^Mr^,  nf  i^Tipl«v>r  /  «fTVV 


N.fTW  nf  «i|w^-io^ 


Title  or  dunes  (for  idenuCcUion  pufpota) 


Niffles(t)  of  a>-workcr(s) 


Retsoo  for  leaving 


'  /""        I  To     I      "°/^ 


"■'""''"T'"""" 


U..~.  .-H  .Mr^  nf  .-^Inv^  /  .i.^,-.. 


D 


Title  or  dulia  (for  tdcnuficuioii  puipoMs) 


NiiDei(>)  of  co-workei(i) 


1f,«,|    >«"/y'    |to  I  ^°7^ 


rW_  nf-^lnyiTW^ 


Uo.    Yr. 


Raaaoofor  leaving 


M.».  .~<  .Atr^  ,rf.^/~-  /  .p.^^ 


M.m>nf«ir>.vi.,» 


NaoM^i)  of  oo>woricci<s) 


Title  cr  itoxs  (for  ideaificMico  purpoaca) 


I      ^' /^'      It.    I    "°/^ 


333 


Personal  History  Statement 


IBxperience  and  Employment 


37    Lisi  the  nuna  >nd  iddresses  of  uiy  licncsing  or  regulatory  agency  with  which  the  penoD  has  filed  ui  application  for  a 
or  not  such  lictnsc  or  permit  wras  granied  and  the  dale  nich  request  was  filed 


upaiiona]  liccrae  or  pennit,  whether 


N.m^  .nrf  mHrtri^  nf  wnnlnvw  /  totne^ 


Nitmf  nfM.pCT^^^n^ 


n.t^nfwtinlftvmwil 


To 


Title  or  duties  (for  idcniiiicalion  purposes) 


N«nia(i)  of  co-worket<i) 


Reason  for  leaving 


Ift^  I      **'/•"      |to   I    mo/yT 


n.l^rtffmplr.v^WdTil 


VJ.fpi.  .nH  .H^r^  »f  i^npl^v^r  /  .y^txrv 


Title  or  duties  (for  idenUflcation  purposes) 


Nanies(s)  of  co-worker(s) 


Reason  for  leaving 


|F„n.|        **"/'"        I  To     I      M°/Y 


niinnfrmrlnjTnmi 


K.m^  .n^  .f4Hr^t  ^f  ^rnnlnvw  '  .yw^-v 


Title  or  duties  (for  identification  purposes) 


Naines<s)  of  co-worka<s) 


IZI 


r>.i^.>f.myiln^m>n< 


M..-.  .~<  .AWn  nf  >«.pln>w  ;  .f~^ 


Mmo  nf  nip.>v..n. 


THlc  or  dutia  (for  idntificalioB  pupoMt} 


NaiMl(t)  of  oo-w«ka(i) 


|Fn«.  I        Mo/Yr        |  ,.„     [      Mp-yTT 


334 


Personal  History  Statement 


^loaaciai 


J«.  Tlitm»Mgonmofper>onilfiMncaUrtlev»nlloinindividu»ri<fuliricai<mforlliepo«il»                    Thcrtfort,  pteMt  ai  m  Ihc 
ruuma.1  MlOTcnu  belo»    Be  compUu  md  iccumt   Th«  inKxiB  of  aidatrfnea  in  ilidf wH  na  be  UMd  in  evtluMiig  your  qu»lific«ion». 
but  ralher  th«  bcluvior  exhibiled  in  meeting  ytxir  finmcia)  obligitions- 

CuiTcm  Monthly  Income                                         ] 

Cteren  MoMhly  Expendinires                                   | 

Monthly  ubry 
Spouie'l  laUiy 
Other  monthly  incone  -  describe: 

S 

Real  Emu  (montaite)  f,ytaaMf) 

S 

RO, 

Other  moolhly  paymctti - 

TOTAL  MONTHLY  INCOME 

Eoinuud  monthly  cca  ofliving  (inchide  utOilies, 
auminnea.  etc)  nd  ny  ocbcr  ol>li|iticn.. 
TOTAL  MONTHLY  EXPENDITURES 

s 

S 

CuiTtnt  AiKls                                                                       1 

Cunen  Lubilitiei                                                     1 

ChKking 
RedEoale 

% 

s 

Lon-UrraLom 

Slodu  ind  Bondi 

Ofeer  Liibililiel  -  dacnbe: 

Lifc  inurance  (caih  vmlue  of  whole 

life  polity) 

ABM  - - 

OdicrAaeii-dacribe: 

TOTAL  ASSETS 

i 

TOTAL  LIABOJIIES 

i 

335 


iFmanCf  al        Conu  nued 


Persona]  History  Statement 


29    Plc*s«  tupply  more  dcuiltd  information  tboui  your  ch»fg< 


corttricu.  or  other  financial  li»bilit>«. 


Acooum  Number 


30   Have  you  ever  filed  for  at  declared  banknipicy? 

If '*ves.~  please  give  demis  (include  when,  wtwft.  why). 


D 


3 1 .  Have  any  of  your  bills  ever  been  turned  over  to  a  collection  agency?                  Q] 
if  "yes."  please  give  deuils  (include  when,  firms  involved,  circumsUnoes) 


32.  Have  you  ever  had  pudiascd  goodk  repoaacoed? 
If  "yea."  please  give  detaib  (include  when,  finni  t 


D 


336 


Personal  History  Statement 


jlitaiy  Service 


33    If  you  tn  »  mak  under  ■ge  36.  pittat  pnavKk  the  following 


Sdcdivc  Service  Number 


Approxiiniu  Dele  of  Rcpflntion 


Ail^eH  el  Tnc  ofRcgiitntiaii 


34.  Have  ycu  «vtr  tcrved  b  the  vmcd  forces,  Neboial  Guwd  or  miliury  n 
tf  >ei,'  flntr  supply  tJM  following  infaniwtian: 


Bnnch  of  Service 


Service  Number 


Due  of  Service 


35    Are  you  cufTently  participeiing  m  eny  milrtarv  rnervc  or  Nibonal  Ouird  progim?  11    Yw 


D      No 


36.  Have  you  ever  been  the  nibjed  of  any  judicial  or  ooa  -judicial  ductpltnary  aciioa  wiiile  in  the  nulitary.  National  Guard  or  miliiaiy  n 


If  "yo,"  plcMe  five  deuib  (include  branch  of  service,  when,  where,  circuniaanco> 


37    Pail  convnanding  officers  or  mi)iuj>icquiimanccs  are  poUflialaourceiorrclcvviitnforiBBtion  pertaining  to  yo^  Plcsae  list  tboee 

mdividuaU  who  know  you  well  enough  lo  provide  iccunu  mfonnation  about  you. 


M.  tfyouhiwrwbMnafnsudvcsxivicudforinyanniCcidudait  nScvKlalkmt\pl€atpyit«>tfoa<rmgiB!amaiaa:  (Da  &a  Dm  ynur 
fW0>4  may  bvc  been  tfiecud  by  i  mlnit  m  cipuit<n««.  •  rdoe.  or  •  pBdoc  hxl  qaciSc  ks>l  raplicalxn  ■•  u>  bow  )«  ■hoiild  ■»»«  Dm 
quiOHai  FtaM  mc  the  INSTRUCTION  ftpi  f<*  >  deuiM  piiik.)  Lis  ill  on  e-an  (nHCUtiom.  fdcoy  or  mbdemoaor  or  ranviaioa  tmtct. 
IIk  div^ .  anic  nd  addrai  of  Ok  c>iun  invoked,  Ihe  aiTMiBf  •cmcy.  iDd  tka  <tu  <tf«iM  nd  du  of  «qiaa» 

Apfn»LDac 

MkaA«BKy 

CmnWM 

337 


Persona]  History  Statement 


39    Hive  you  ever  been  pUccd  on  court  probftlion  u  ui  aduh** 
Vya.'  ple4se  pve  deuils  (include  wriwn.  wtierc,  wbv). 

40   Lifl  each  cnmmil  charge,  (excluding  minor  traffic  duvgesX  wtiether  or  oot  there  b  a  cxmvicijon.  if  witch  crimina]  charge  b  within  10  yean  of  the 
dau  ofthu  application  and  t>  not  otherwise  listed  above,  the  cnminaJ  charfe,  the  name  and  addrca  of  the  arreting  agency,  the  oourl  involved 
and  the  date  and  dupociUon: 

Violation(s) 

Convicted 

Approx.Datc 

Pt^ce  Accncy 

Court 

□    Y»            □      No 

□    Y=            □      N. 

□    Y=            □      No 

□    Y«            □      No 

□    Y-            □      No 

□    Y«            □      No 

41.  Are  you  now  or  haw  you  ever  been  involved  as  a  plamiff  or  defendaol  many  civil  action'' 
If  "yei,"  plese  give  deuils  (include  when,  where,  name  and  location  of  court,  circumstancca). 

I^EOT  VdUclc  Operation 


An  invcttipiicn  of  your  driving  history  will  be  made  through  a  recordi  check.  To  expedite  this  procedure,  plcaae  nipply  the  following  infbrmitiaa: 


42.  Drwtr^  license  number 

Sutt 

Ei^mlModau 

Name  under  which  licenK  wu  gnxaed 

43.  Please  list  other  stales  where  you  have  b 

een  licensed  to  operate  a  BioCor  vehicle. 
Sutc 

Slate 

Suu 

Name  under  whid)  license  was 
granted 

Name  under  which  liccDK  was 
granted 

Name  under  which  license  was 
piAed 

Nme  under  wbidl  lioensc  wis 

338 


Personal  History  Statement 


Motor  Vehi«leOp«Tfltio^^  Continued 


44    H»v.  you  eve.  bten  refilled  •dnvo'ilioitK  by  my  lUU? 
If -yev-  pleM«  e«pliiii  (incKide  *(ien.  where,  why) 

45   Cilifomii  l»w  requires  lh»l  operuor  ind  ownen  of  mMo.  vthiclei  be  covered  by  eiaomobile  lUbilily  imunnce  or  bond  or  dtjimrl  of  $35,000  wilh 
die  Deptnmert  of  Moloc  Vehicles   Therefore,  pleeje  lia  the  cmrenl  liebibly  insurance  you  htvt  with  your  motee  vehicles. 

Company 

Address 

Policy  Number 

Date  of  Expiration 

If  vou  ire  bonded  or  hive  depoiiled  $35,000  lo  meet  your  motor  vehicle  finincul  rtsonribaity.  please  mdinle 

DBond                     1—'       $35,000                                                                                                                                                                                

4<    Ple.se  list  til  traffic  ciulioiu  (exclude  pMkingciluiora)  you  hive  received  withia  the  Un  5  yem 

Nattireofviotition 

Appronniate  Date 

Indicate  whether  fined  or  action 
taken  on  irivtt't  license 

47.  Have  you  ever  been  involved  as  •  dnver  m  a  motor  vehicle  accident  withm  the  last  5  yean7 

Date 

Location 

Police  mvcstigalioo? 

PoUcc  Agency 

Doe 

Location 

Polia  investigtlioa? 

Police  Agency 

DM< 

Location 

Police  inveoiislioa? 

Polioe  Agency 

Dat 

Location 

Police  invcsugauon? 

Police  Agency 

Du 

Location 

PoUceAccncy                                                                                                                                                                                          1 

339 


Personal  History'  Statement 
*^Y*K''*^*P^*'<".  Continued 


48    If  there  u  ui>ihing  you  wish  lo  discuss  ibout  your  dnvmg  record,  pluse  use  the  tpace  below. 


49.  Has  your  license  ever  been  suspended,  revoked^  or  plkoed  on  negligent  operalor's  probation?         PH 
If  "yes."  please  give  deuils  (include  whil,  when,  where,  why). 


D 


iGcnerai  Information 


50    Hive  you  ever  been  refused  insurance  for  any  reason  other  than  failure  to  pay  a  premium? 
If 'yes,'  please  explain  (include  company  name  and  addrest,  dale,  «nd  reason) 


D 


31.  Have  you  ever  applied  for  a  permit  to  carry  a  ooooealed  weapon? 
Ifyo.'  pleaie  provide  the  following  mfomnion: 


□    Y- 


I  hereby  ocrtJiy  thai  all  oaiements  nude  in  this  penooal  Ufiory 
BMloial  facti  will  iub)ect  me  to  diaqualificalion  or  d*imi»al 


•re  true  and  cocnplete,  and  I  unkntand  thit  my  minutancnu  of 


Dale  oonplded 


340 


National  Indian  Gaming  Association 

904  Pennsylvania  Avenue.  S.E.,  Washingion.  D.C.  20003 
Phone:  (202)  546-7711     FAX:  (202)  546-1755 


August  11,  1993 

Dear  Members  of  the  Native  American  Affairs  Subcommittee: 

By  letter  dated  August  3,  1993,  Rep.  Robert  G.  Torricelli  of  New  Jersey  wrote  to  you 
urging  your  co-sponsorship  of  his  bill,  H.R.  2287,  entitled  "The  Gaming  Regulatory  and  State 
Law  Enforcement  Act  of  1993".  Regrettably,  Mr.  Torricelli's  letter  is  shot  through  with 
inaccuracies,  distortions  and  outright  misrepresentations  with  respect  to  the  operation  and 
regulation  of  Gaming  on  Indian  reservations,  and  the  Congressional  and  Administrative  oversight 
that  has  been  devoted  to  these  gaming  operations. 

The  initial  distortion  begins  with  the  capitalized  title  in  which  he  asserts  that  gaming 
operations  on  Indian  resei"vations  are  "dangerous"  and  "unregulated".  No  evidence  is  offered  to 
support  either  of  these  allegations. 

In  his  statement  to  accompany  the  mtroduction  of  H.R.  2287,  Mr.  Torricelb  stated: 


"When  IGRA  [The  Indian  Gaming  Regulatory  Act]  was  first  passed  there  was 
little  indication  that  organized  ciime  was  infiltrating  gaming  on  reservations. 
However,  over  the  last  five  years  this  has  become  a  significant  problem."  (Cong. 
Rec.  pp  E  1367-68  -  May  26,  1993). 


On  July  27,  1993,  in  a  letter  to  the  Chairman  of  the  United  South  and  Eastern  Tribes  Gaming 
Association,  ms.  Mary  C.  Spearing,  Chief  of  the  General  Litigation  and  Legal  Advice  Section, 
Criminal  Decision,  Department  of  Justice,  wrote  as  follows: 

"As  alluded  to  in  USET  Gaming  Association  Resolution  UGA  93-04  ... 
representatives  of  the  Department's  Criminal  Division  and  the  FBI  testified  before 
a  Senate  Committee  that  very  httle  evidence  of  attempts  by  the  organized  crime 
"families"  to  infiltrate  Indian  gaming  had  been  detected.  We  have  no  reason  to 
modify  that  evaluation  at  this  time." 


A  copy  of  Ms.  Spearing' s  letter  is  attached. 


341 


U.S.  House  of  Representatives 
Native  American  Affairs  Subcommittee 
August  11,  1993 
Page  Two 


Mr.  Torricelli  asserts  that  Indian  gaming  is  "unregulated."  Nothing  could  be  further  from 
the  truth.  It  is  in  fact  regulated  first  by  the  Tribes  themselves;  second  by  oversight  from  the 
National  Indian  Gaming  Commission  established  under  the  Act;  third  by  the  Department  of 
Interior  and  the  Department  of  Justice;  and  finally,  with  regard  to  those  tribes  operating  games 
that  are  subject  to  compact  with  states,  the  states  themselves.  The  integrity  of  the  games 
operated  by  the  Indian  tribes  is  attested  to  by  the  small  number  of  criminal  complaints  that  have 
arisen  from  Indian  gaming  operations.  These  statistics  will  certainly  compare  favorably  with  the 
criminal  complaints  arising  from  gaming  operations  in  any  other  part  of  the  country. 

Mr.  ToiTicelli  refers  to  a  report  of  the  Inspector  General  of  the  Department  of  the  Interior 
issued  in  December  of  1992.  This  report  was  critical  of  the  oversight  that  had  been  exercised 
by  Federal  agencies  over  Indian  gaming  operations  in  years  past  and  concluded  that  certain 
leasing  agreements  of  gaming  equipment  had  resulted  in  significant  losses  of  income  to  the  tribes. 
At  no  place  in  this  report  was  the  integrity  of  the  gaming  operations  questioned.  Since  this  report 
was  issued,  the  National  Indian  Gaming  Regulatory  Commission  has  promulgated  its  initial 
regulations  and  the  Commission  is  now  moving  into  full  operation. 

At  the  heart  of  Mr.  Torricelh's  bill  is  a  concern  expressed  both  in  his  introductory 
remarks  and  in  his  recent  "Dear  Colleague"  letter,  i.e.,  that  Interior  Department  regulations  allow 
"the  establishment  of  'gaming  enclaves'  far  away  from  existing  tribal  reservations"  and  that 
'[T]hese  rules  have  encouraged  several  groups  with  dubious  claims  to  apply  for  federal 
recognition  for  the  sole  purpose  of  operating  casinos  free  from  state  regulations." 

In  fact,  only  twice  in  the  five  years  since  the  Indian  Gaming  Regulatory  Act  was  enacted 
has  the  Department  of  the  Interior  accepted  lands  into  trust  that  were  not  inside  of  or  adjacent 
to  an  existing  Indian  reservation,  and  in  each  of  theses  cases  the  Governor  of  the  State  where 
such  lands  were  located  approved  of  this  action.  Existing  law  and  regulations  governing  this 
subject  arc  cleaily  already  restrictive. 

Mr.  Torricelli  expresses  concern  for  non-federally  recognized  tribes  or  groups  petitioning 
the  Secretary  of  the  Interior  for  recognition  as  a  "federally  recognized  tribe"..  First,  he  assumes 
without  examination  that  the  claims  of  such  groups  are  "dubious"  and  are  made  for  the  "sole 
purpose"  of  operating  casinos  free  of  state  regulation.  In  fact,  the  Interior  Depaitment  regulations 
governing  petitions  for  Federal  recognition  were  promulgated  in  1978  in  order  to  address  long 
standing  efforts  of  non-federally  recognized  tribes  and  groups  to  achieve  Federal  recognition, 
some  of  which  date  to  the  turn  of  the  centuiy.  It  is  worthy  of  note  that  one  such  petitioning  tribe 
exists  within  the  State  of  New  Jersey. 

The  bottom  line  of  the  TorriceUi  bill  is  that  it  would  destroy  gaming  on  Indian 
reservations  and  all  of  the  jobs  and  economic  benefits  that  flow  not  only  to  the  Indian  tribes  and 


342 


U.S.  House  of  Representatives 
Native  American  Affairs  Subcommittee 
August  11.  1993 
Page  Three 


their  members  but  also  to  the  surrounding  non-Indian  communities.  The  "competitive  advantage" 
that  exists  for  tribal  games  exists  only  because  of  the  more  restrictive  laws  of  the  states  that 
surround  the  reservation.  If  the  restrictive  laws  of  the  states  are  made  applicable  to  the  tribes, 
the  tribes  will  be  unable  to  attract  business  to  their  lands. 

The  principal  purpose  of  the  Torricelli  bill  is  to  protect  an  industry  in  Atlantic  City  and 
Nevada  and  to  deny  tribes  an  opportunity  to  compete.  The  bill  does  not  seek  to  establish  a 
"level  playing  field".    It  seek  to  limit  the  players  on  the  field  to  one  team  only. 

Sincarely 


Smcarely,  /^ 

Rirhar/t  r.    Hill  I 


Richard  G.  HUl 
Chairman 


Attachment 


343 


U.S.  Dcptirtnient  of  Justic^ 


Wlt'iKUttNi.  D.C  iCSiO  iff  _ 


^JUL  2  7  1993 


Phillip  Martin,  Chairman 

United  South  and  Ea8t«rn  Tribes  Gaming  Association 

400  N.  Capitol  Strest,  N.H. 

Washington,  D.C.  20001 

Dear  Kr.  Chaiman: 

This  is  in  response  to  your  latter  to  the  Attorney  General 
suggesting  that  the  Department  conduct  an  Investigation  of  Indian 
gaming  operations  to  determine  whether  or  not  there  is  a  basis  for 
allegations  of  organized  crime  involvement. 

The  investigative  am  of  the  Department  of  Justice  is  the 
Federal  Bureau  of  Investigation.  One  of  its  highest  priorities  is 
the  detection  and  investigation  of  organized  criminal  attempts  to 
infiltrate  or  exploit  legitimate  enterprises.  The  Bureau's 
authority  stems  from  a  number  of  federal  criminal  statutes, 
especially  those  contained  in  Chapter  95  (Racketeering)  and 
Chapter  96  (Racketeer  Influenced  and  Corrupt  Organizations)  of 
title  18  of  the  united  states  Code.  when  evidence  of  criminal 
violations  is  developed  the  matter  is  referred  to  the  appropriate 
United  States  Attorney  for  prosecution.  We  are  confident  that  the 
Bureau  is  carrying  out  its  responsibilities  with  diligence  and 
vigilance  and  that  no  investigation  focussing  on  Indian  gaming 
operations  in  general  is  warranted. 

As  alluded  to  in  USET  Gaming  Association  Resolution  uga  93-04, 
which  you  included  in  your  letter,  representatives  of  the 
Department's  Criminal  Division  and  the  FBI  testified  before  a 
Senate  Committee  that  very  little  evidence  of  attempts  by  the 
organized  crime  "families"  to  infiltrate  Indian  gaming  had  been 
detected.  We  have  no  reason  to  modify  that  evaluation  at  this 
time. 

The  Department  fully  appreciates  the  importance  of  crime-free 
gaming  to  tribal  economic  development  and  the  congressional 
policies  in  that  regard.  I  assure  you  of  our  continued  interest  in 
achieving  and  maintaining  that  goal.  We  hope  we  can  count  on  your 


344 


support  for  efforts  to  strengthen  the  regulatory  mechanisms 
currently  provided  in  the  Indian  Gaining  Regulatory  Act. 

Sincerely, 

John  C.  Keeney 

Acting  Assistant  Attorney  General 

Criminal  Division 


\L  " 


MaAr  Cj  Shearing, /Chief 
General  Dltigatioh  and 
Legal  Aavice  Section 
Criminal  Division 


345 

Mr.  Abercrombie.  Thank  you. 

Mr.  Wapato,  I  wanted  to  merely  indicate  that  I  quite  agree.  The 
lotteries  are  not  taxed,  individuals  who  profit  from  the  lottery  are 
taxed  on  their  individual  income,  and  so  you  would  be  in  agree- 
ment with  the  previous  testimony,  would  you  not,  that  tribal  bene- 
fits which  may  accrue  in  the  form  of  a  school  are  not  taxed,  but 
if  an  individual  within  the  tribe  receives  an  income  that  individual 
indeed  pays  taxes? 

Mr.  Wapato.  The  individual  indeed  does  pay  Federal  income  tax. 
State  income  tax.  Many  of  the  employees  are  non-Indian  employ- 
ees, they  pay  Federal  taxes.  State  taxes. 

Mr.  Abercrombie.  So  the  implication  from  previous  panels  that 
Indians  are  not  pajdng  taxes  as  opposed  to  a  nonprofit  tribal  entity 
are  at  least,  if  not  incorrect,  misleading? 

Mr.  Wapato.  They  are  misleading,  they  are  incorrect  and  grossly 
inaccurate.  Anybody  that  works  at  the  casinos,  Indian  or  non-In- 
dian, does  pay  taxes,  both  Federal,  and  if  there  are  State  taxes, 
pays  those. 

Mr.  Abercrombie.  Very  well.  I  have  no  questions  at  this  point. 

Mr.  Abercrombie.  Mr.  Calvert. 

Mr.  Calvert.  Thank  you. 

I  just  wanted  to  point  out  from  California's  perspective,  I  know 
I  keep  coming  back  to  California  and  there  is  reason  for  it.  Of  the 
200  or  so  federally  recognized  tribes  in  the  United  States,  approxi- 
mately half  are  in  one  State,  and  that  is  California.  So,  obviously, 
we  have  great  concern,  not  so  much  for  economic  competition,  but 
because  of  problems  that  could  possibly  exist  when  you  have  large 
numbers  and  possibly  large  numbers  of  reservations  starting  to  op- 
erate casinos,  as  they  presently  legitimately  do  with  Class  I  and 
Class  II  gaming,  which  is  allowed  in  the  State  of  California. 

As  you  know,  Class  III  gaming  is  not  allowed  in  the  State  of 
California  presently,  and  we  are  quite  concerned  that  some  res- 
ervations have  taken  advantage  and  are  operating  certain  Class  III 
functions  without  proper  permission. 

Now,  there  is  only  one  federally  recognized  tribe  in  the  entire 
State  of  Connecticut,  I  believe,  is  that  correct? 

Mr.  Wapato.  At  the  present  time,  yes. 

Mr.  Calvert.  And  so  it  obviously  makes  enforcement  of  that  par- 
ticular casino  much  simpler.  In  California's  instance,  if  we  had 
Class  III  gaming,  wouldn't  you  agree  that  the  complexity  in  Cali- 
fornia, you  have  some  experience  in  California,  understand  Califor- 
nia, would  be  tremendously  more  complex? 

Mr.  Wapato.  Well,  the  complexity  can  be  made  simple,  though. 
In  this  matter,  the  compact  that  we  negotiated  between  the  State 
and  the  tribe,  and  so  whatever  layers  of  regulation  and  enforce- 
ment that  need  to  come  into  play  can  come  into  play  between  the 
State  and  each  individual  tribe. 

At  the  present  time,  there  are  only  16  tribes  in  negotiation  for 
Class  III  in  the  State  of  California.  Aiid  I  think  it  might  be  a  little 
bit  inaccurate  to  say  that  there  is  no  Class  III  in  California.  The 
court  decision,  the  Burrell  decision  has  indicated  that  elements  of 
the  California  lottery  are,  in  fact,  Class  III  t3T)e  of  gaming,  and 
therefore  the  tribes  can  negotiate  for  those. 


346 

And  having  said  that,  they  can  negotiate  for  them  doesn't  nec- 
essarily mean  that  all  94  tribes  will  end  up  with  Class  Ills.  As  you 
are  well  aware,  the  geography  of  California,  many  of  those  94 
tribes  are  in  very  remote  areas  and  would  have  very  small  likeli- 
hood of  developing  large-scale  or  meaningful  Class  III  type  of  oper- 
ations, and  so  I  think  the  very  fact  that  that  decision — I  think 
there  is  some  confusion  also  if  there  is  a  video  machine  or  the  video 
device  of  any  type,  that  somehow  that  is  a  slot  machine. 

There  are,  in  fact,  electronic  pull-tab  machines  that  are  Class  II 
machines — and  you  asked  a  question  of  the  national  Indian  Gam- 
ing Commission  earlier.  It  is  our  opinion  that — and  the  tribe's  opin- 
ion that  those  machines  are  clearly  Class  11.  And  if  they  are  clearly 
Class  II,  they  are  clearly  under  the  purview  and  regulation  of  the 
National  Indian  Gaming  Commission  and  could  be  subject  to  any 
of  those  regulations.  So  it  is  not  unregulated. 

I  think  one  of  the  other  questions  that  came  up  was  who  docu- 
ments, and  who  accounts,  and  how  do  you  follow  through  the 
money  that  might  be  going  into  those  maclunes?  And  that  is  clearly 
a  tribal  regulatory  matter.  The  tribes  have  passed  regulations 
under  the  National  Indian  Gaming  Commission  regulations  of  Jan- 
uary 22nd. 

There  are  certain  audits,  certain  things  that  they  must  have  in 
place,  and  they  are  in  place.  And  those,  in  our  opinion,  are  also 
clearly  under  the  National  Indian  Gaming  Commission's  purview 
and  regulation. 

But  as  several  people  have  said  before,  the  tribes  need  to  assure 
the  integrity  of  their  own  game.  They  have  to  have  a  game  that  has 
integrity  or  their  patrons  won't  come.  And  if  their  patrons  won't 
come,  then  it  doesn't  make  much  sense  for  them  to — I  mean,  it  is 
only  in  their  best  interests  to  make  sure  that  regulations  are 

Mr.  Calvert.  Obviously,  there  is  a  difference  of  opinion  with  var- 
ious Federal  agencies  on  what  is  Class  II  and  Class  III,  certainly 
in  the  State  of  California.  The  problem  exists  as  far  as  what  some 
people  believe  was  the  intent  of  the  Indian  Gaming  Regulation  Act 
was  only  to  allow  gambling  which  was  consistent  with  what  was 
legal  within  a  particular  State. 

Then  we  get  into  definitions  of  what  is  Class  III  and  what  is 
Class  II.  So  there  is  some  confusion.  And  wouldn't  you  agree  that 
we  need  to  clarify  where  everyone  understands  clearly  what  is 
Class  II  gaming  and  what  goes  into  Class  III  gaming? 

Mr.  Wapato.  If  all  50  States  had  similar  regulations  regarding 
gaming,  then  maybe  you  could  do  that  on  a  national  basis.  It  would 
be  impossible  to  do  that  on  a  national  basis  because  each  State  has 
different  regulatory  schemes  on  gaming  and  has  different  games 
that  are  legal  in  that  State. 

What  the  State  of  California  has  been  unable  to  understand  at 
its  negotiating  level  is  that  they  have  quite  a  broad  public  policy 
on  which  games  are  in  their  State.  And  in  the  lottery  itself,  there 
are  probably  between  30  and  40  variations  of  the  games  that  are 
within  the  State  lottery. 

The  court,  the  Federal  court  did  not  lightly  look  at  that  public 
policy  of  the  State  of  California.  They  tested  it  back  against  the 
findings  in  the  Cabazon  case  and  then  they  tested  it  back  against 
the  requirements  of  IGRA,  and  then  they  came  up  with  their  deci- 


347 

sion.  And  within  their  decision,  they  indicated  that  certain  of  those 
games  in  the  lottery  are  Class  III. 

The  State  of  California,  negotiating  at  the  highest  negotiating 
level,  I  should  say,  the  governor's  level  has  been,  I  guess,  unable 
to  see  that  public  policy  distinction.  I  don't  think  that  the  charac- 
terization that  the  IGRA  permitted  certain  types  of  gaming  is  to- 
tally accurate.  I  think  IGRA  restricted  what  the  tribes  could  do  be- 
fore the  act. 

It  didn't  permit  tribes  to  engage  in  gaming.  It  restricted  their 
ability  to  engage  in  gaming.  And  it  gave  the  State  an  inroad  on  to 
the  tribal  sovereign  turf  by  requiring  the  compact  to  be  negotiated 
between  a  tribe  and  a  State  for  the  Class  III. 

Mr.  Calvert.  Now,  going  beyond  slot  machines,  as  you  probably 
are  aware,  there  are  casino  ships  docking  in  California,  large  tour- 
ist industry  in  the  State  of  California.  And  there  were  reservations 
saying,  well,  California  allows  those  ships  to  dock,  so  by  definition, 
they  are  allowing  craps  and  roulette  and  all  those  other  kinds  of 
games  that  take  place  in  Las  Vegas  to  take  place,  so  we  should 
allow  that  to  take  place  conceivably  on  all  94  reservations.  That, 
obviously,  made  the  State  of  California  very  concerned  that  once 
we  step  into  slot  machines  or  whatever  we  are  going  to  define  those 
as,  that  we  are  going  to  go  into  full-scale  gambling.  And  in  the 
State  of  California,  obviously,  when  we  have  half  of  the  Indian  res- 
ervations in  the  State,  even  though  you  mentioned  there  is  only  16 
negotiating,  that  is  16  times  more  than  Connecticut,  at  the  present 
time,  it  becomes  a  very,  very  tough  issue. 

One  of  the  consequences  of  that,  I  think,  and  I  would  think  that 
the  various  tribes  thought  of  this,  is  if  Class  III  gaming  comes  to 
California  on  the  reservations,  don't  you  believe  that  it  is  conceiv- 
able that  the  State,  at  that  point,  wiU  just  throw  in  the  towel  and 
legalize  gambling  in  California? 

Mr.  Wapato.  I  am  a  little  hesitant  to  predict  what  the  State  of 
California  might  do  in  any  case,  but 

Mr.  Calvert.  I  will  share  that  opinion. 

Mr.  Wapato.  That  could  be  a  possibility.  And  I  understand  they 
may  be  under  some  pressure  to  do  that. 

Mr.  Calvert.  What  I  am  getting  at  is  the  advantage  that  Class 
I  and  Class  II  gaming  in  California  now  with  the  reservations  that 
they  have,  they  are  getting  considerable  revenue  from  those  res- 
ervations. I  don't  detract  the  fact  that  it  is  going  into  good  works 
with  those  reservations  in  California. 

What  I  am  thinking  is  sometimes  too  much  of  a  good  thing  is 
going  to  kind  of  kill  the  goose  that  is  laying  the  golden  eggs  here. 
If  that  happens  in  California,  what  happens  to  the  competitive  ad- 
vantage that  the  reservations  presently  have  and  having  an  effec- 
tive monopoly  on  Class  II  gaming  in  California? 

Mr.  Wapato.  I  guess  they  would  be  in  the  same  predicament 
that  483  casinos  are  in  the  State  of  Nevada,  they  would  have  to 
compete  with  each  other. 

Mr.  Calvert.  And  at  the  same  time,  we  would  possibly  be  put- 
ting something  on  our  society  in  California  that  a  majority  of  peo- 
ple in  California  don't  want. 

Mr.  Wapato.  Well,  I  think  it  is  clear  that  the  majority  of  the  peo- 
ple in  California  don't  want  non-Indian  casino  gaming.  I  think  it 


348 

is  equally  clear  from  a  public  opinion  poll  conducted  by  the  Field 
Public  Polling,  that  an3rwhere  from  64  to  76  percent  of  the  citizens 
of  California  support  Indian  gaming  and  Indian  casinos  on  a  res- 
ervation. They  support  it  for  two  reasons,  which  I  think  are  the 
right  reasons: 

Number  one,  they  support  it  because  it  would  be  beneficial  to  the 
Indian  tribe  as  an  economic  development  venture.  Number  two, 
they  support  it  because  they  see  it  as  an  entertainment  option,  and 
they  would  use  it  for  that  reason.  Those  same  people  in  that  same 
poll  would  oppose  non-Indian  gaming. 

Mr.  Calvert.  That  is  what  I  was  going  to  bring  up.  One  last 
comment.  As  a  consequence  of  Class  III  gaming  coming  to  Califor- 
nia on  Indian  reservations,  if  those  same  individuals  were  asked, 
as  a  consequence,  the  possibility  exists  that  gaming  will  come  to 
California  statewide,  non-Indian  gaming  statewide,  in  L.A.,  in  San 
Francisco,  in  San  Diego,  all  the  urban  areas,  do  you  believe  that 
those  same  individuals  would  be  in  favor  of  it? 

Mr.  Wapato.  I  think  if  those  individuals  are  the  citizens  of  Cali- 
fornia that,  yes,  they  would.  I  think  if  those  individuals  are  the  ad- 
ministration, they  would  say  no.  They  would  say  no,  I  think,  for 
the  same  reason,  partly  the  same  reason  that  we  heard  from  Don- 
ald Trump  and  Congressman  Torricelli,  and  it  would  be  for  eco- 
nomic reasons,  that  it  was  the  tribe's 

Mr.  Calvert.  In  our  case  in  California,  we  are  not — I  don't  care 
what  Las  Vegas  does  or  what  New  Jersey  does,  I  care  about  the 
State  of  California,  and  what  I  am  concerned  about  is  gambling. 
Unfortunately,  we  can  get  into  the  societal  ills  of  gambling,  and 
once  we  bring  that  into  an  urban  setting,  the  problems  that  could 
exist  from  gambling  on  poor  people  who  use  up  their  paychecks  to 
gamble,  and  so  forth,  and  so  on,  I  don't  want  to  preach  that — what 
I  am  stating,  that  I  believe  a  different  view,  that  most  people  in 
California  would  not  want  to  see  statewide  gambling.  Class  III 
gaming  in  the  State. 

I  do  agree  with  that  the  people  in  the  State  agree  that  Indian 
gaming  should  be  allowed,  Class  I  and  Class  II  gaming,  and  if,  in 
fact.  Class  III  gaming  came  to  the  reservations,  I  think  the  unin- 
tended consequence  of  that  would  be  is  that  gaming  would  go  state- 
wide, and  I  believe  that  most  people  in  the  State  would  be  opposed 
to  it.  Now,  that  is  my  opinion. 

Mr.  Abercrombie.  I  am  going  to  exercise  a  prerogative  of  the 
Chair  because  I  think  this  has  been  stated  adequately  by  both 
sides,  and  we  have  others  who  have  been  patiently  waiting. 

Mr.  Elroy,  I  apologize,  I  think  you  were  out  of  the  room  at  the 
time  I  called  your  name,  so  I  will  ask  you  to  take  up  your  testi- 
mony at  this  point,  if  you  would  be  so  kind. 

STATEMENT  OF  RICHARD  JAMES  ELROY 

Mr.  Elroy.  Okay. 

Thank  you,  Mr.  Chairman. 

Mr.  Abercrombie.  Aloha  and  welcome. 

Mr.  Elroy.  I  am  a  retired  special  agent  of  the  FBI,  recently  re- 
tired. For  16  years  I  investigated  matters  involving  Native  Ameri- 
cans in  Oklahoma.  Oklahoma  has  the  largest  concentration  of  Na- 
tive Americans  in  the  United  States. 


349 

In  1989,  I  was  assigned  to  the  United  States  Senate,  Committee 
on  Investigations,  Select  Committee  on  Indian  Affairs.  During  this 
assignment,  I  reviewed  gambling  activities  on  approximately  100 
reservations  in  24  States. 

In  the  course  of  my  U.S.  Senate  assignment,  I  have  found  a  pat- 
tern of  activity  relating  to  Indian  gaming  operations.  Almost  with- 
out exception,  Indian  tribal  officials  contract  with  non-Indian  out- 
side companies  to  build  and  operate  their  gambling  operations. 

In  the  majority  of  these  cases,  these  non-Indian  companies  prom- 
ise much  but  deliver  little  to  the  tribe.  The  corrupt  tribal  leaders 
end  up  doing  well,  and  the  contractor  ends  up  doing  well,  but  the 
rank-and-file  Indians  weren't  ending  up  with  very  much. 

Most  of  the  contracts  dealt  with  a  division  of  the  profits  or  net 
profits  to  the  tribe.  The  problem  is  that,  in  many  cases,  the  skim- 
ming and  other  activities  left  no  net. 

Connecting  Indian  management  directly  to  traditional  organized 
crime,  such  as  La  Cosa  Nostra,  the  LCN,  is  very  difficult.  The  LCN 
members  are  very  sophisticated  and  effective  in  being  able  to  dis- 
guise their  direct  involvement  and  influence  in  these  areas. 

They  use  a  myriad  of  methods  which  camouflage  them  from  the 
public  view.  They  hide  their  interests  through  layers  of  fronted 
businesses.  In  most  cases,  what  we  see  are  front  men.  These  seem- 
ingly legitimate  management  companies,  working  at  the  behest  of 
the  LCN  figures,  are  usually  disguised  within  a  host  of  professional 
sounding  corporations. 

These  front  men  will  in  turn  employ  others  who  may  not  even 
be  aware  of  the  LCN  involvement,  but  who  willingly  participate  in 
the  scheme  or  fraud  which  is  contrary  to  the  tribal  interests. 

These  management  companies  utilize  a  number  of  schemes 
aimed  at  skimming  profits.  These  schemes  and  devices  include 
management  fees,  shills,  rigged  games,  and  a  host  of  other  scams. 
In  the  end,  the  management  firms  end  up  with  a  profit  and  the  In- 
dians end  up  holding  the  bag. 

My  observations  were  shared  by  Tony  Daniels,  Assistant  Director 
of  the  Criminal  Investigative  Division  of  the  Federal  Bureau  of  In- 
vestigation in  his  testimony  before  the  U.S.  Senate  in  1989. 

One  example  is  an  LCN  group  in  Florida.  This  group  became  in- 
volved in  the  control  of  bingo  operations  on  the  Seminole  Indian 
Reservation  in  the  1980s.  The  LCN  used  front  men,  utilizing  a 
group  of  management  companies. 

This  Miami-based  LCN  found  willing  participants  in  their 
schemes  among  corrupt  tribal  leaders.  This  LCN  group  also  ac- 
quired direct  interest  in  the  manufacturing  and  sales  of  Indian 
gaming  supplies. 

In  1989,  I  interviewed  a  connected  member  of  the  LCN  who  oper- 
ated gaming  facilities  on  Indian  reservations  for  the  mob.  He  ad- 
vised that  certain  Indian  gaming  operations  were  financed  and  con- 
trolled by  Anthony  Acceturo. 

Mr.  Acceturo,  I  don't  think  I  need  to  describe  who  he  is.  He  stat- 
ed that  in  order  for  the  mob  to  hold  their  control  over  Indians,  and 
this  is  the  California  case,  that  three  tribal  leaders  were  killed. 
Subsequently,  they  didn't  have  anymore  problems. 

In  testimony  before  the  U.S.  Senate  on  February  8,  1989,  a  wit- 
ness   under   the   Witness   Protection    Program   testified   that   he 


84-760  O  -  94  -  1 2 


350 

skimmed  money  for  the  Luchese  family  on  the  Barona  Reservation. 
He  testified  as  an  example  that  a  $5,800  jackpot  on  the  Barona 
Reservation  was  won  by  an  employee  of  the  paper  supplier  to  the 
Indian  reservation  in  a  rigged  game. 

He  testified  that  Indian  bingo  is  open  territory  for  the  mob.  He 
stated  that  the  mob  is  involved  in  laundering  money  through  In- 
dian reservations.  He  also  stated  that  he  had  personal  knowledge 
of  12  Indian  gaming  operations  directly  controlled  by  the  mob. 

ABC's  Morton  Dean  recently  filmed  Eddie  Somuna  as  he  was 
managing  the  Viejas  tribal  gaming  hall  in  California.  Somuna  was 
convicted  of  felony  gaming  charges  in  Detroit  and  is  an  alleged  mob 
connection. 

In  the  meantime,  there  doesn't  seem  to  be  any  Federal  control 
of  Indian  gaming  operations.  My  sources  in  Indian  reservations  in- 
dicate nothing  has  changed.  The  Indian  gaming  industry  is  wide 
open,  with  no  control,  "business  as  usual,"  the  mob  and  corrupt  of- 
ficial get  the  gold  mine,  the  tribe  gets  the  shaft. 

The  theme  of  my  testimony  is  we  hear  about  these  layers  of  Fed- 
eral people  that  are  looking  at  Indian  gaming.  That  simply  just 
isn't  true.  You  talk  about  the  United  States  Attorney's  office.  They 
are  prosecutors.  They  act  on  information  given  to  them  by  the  Fed- 
eral Bureau  of  Investigation. 

The  Federal  Bureau  of  Investigation  acts  on  information  it  re- 
ceives alleging  violations  within  their  jurisdiction.  But  the  FBI  and 
U.S.  Attorney's  office  do  not  act  as  regulators  or  oversight  on  these 
Indian  gaming  operations. 

Now,  we  have  an  Indian  Gaming  Commission  that  is  supposed 
to  do  that.  That  is  their  job.  I  don't  see  how  you  could  possibly  do 
that  job  with  less  than  30  people.  That  would  require  a  vast  ex- 
panse of  their  staff,  a  few  hundred  investigators  and  some  account- 
ants to  determine  what  exactly  is  going  on,  where  is  the  money 
coming  from,  where  is  it  going  to.  You  have  to  know  this. 

If  you  have  a  management  company  operating  an  Indian  gaming 
operation  and  they  are  billing  out  $5  million  for  purchases  of  slot 
machines,  unless  you  go  out  to  the  reservation,  count  those  slot 
machines,  compare  the  serial  numbers  with  the  numbers  on  the  in- 
voices and  determine  they  actually  spent  that  money,  and  the  ma- 
chines are  in  place,  you  have  no  idea  where  the  money  went. 

[Prepared  statement  of  Mr.  Elroy  follows:! 


351 


TESTIMONY  OF  RICHARD  JAMES  ELROY 

RETIRED  SPECIAL  AGENT  —  FBI 

BEFORE  THE  HOUSE  SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

OCTOBER  5,  199  3 


My  name  is  Richard  James  Elroy.  I  am  a  retired  special  agent  with 
the  FBI.  For  16  years,  I  investigated  matters  involving  Native 
Americans  in  Oklahoma.  Oklahoma  has  the  largest  concentration  of 
Native  Americans  in  the  United  States.  In  1989,  I  was  assigned  to  the 
United  States  Senate,  Committee  on  Investigations,  Select  Committee  on 
Indian  Affairs.  During  this  assignment,  I  reviewed  gambling  activities 
on  approximately  100  reservations  in  24  states. 

In  the  course  of  my  U.S.  Senate  assignment,  I  have  found  a 
pattern  of  activity  relating  to  Indian  Gaming  operations.  Almost 
without  exception,  Indian  Tribal  Officials  contract  with  Non-Indian 
outside  companies  to  build  and  operate  their  gambling  operations.   In 
the  majority  of  cases  these  Non-Indian  companies  promise  much  but 
deliver  little  to  the  tribe.   The  corrupt  tribal  leader  will  do  well, 
but  the  rank  and  file  Indians  get  nothing.   The  contracts  look  good. 
They  promise  50%  of  the  net  profits.   There  are  no  net  profits.   The 
profit  is  "skimmed"  off. 

Connecting  Indian  management  directly  to  traditional  organized 
crime,  such  as  La  Cosa  Nostra  (LCN)  is  very  difficult.   The  LCN 
members  are  very  sophisticated  and  effective  in  being  able  to  disguise 
their  direct  involvement  and  influence  in  these  areas.   They  use  a 
myriad  of  methods  which  camouflage  them  from  public  view.   They  hide 
their  interests  through  layers  of  fronted  businesses.   In  most  cases 
what  we  see  are  front  men.   These  seemingly  legitimate  management 
companies,  working  at  the  behest  of  the  LCN  figures,  are  usually 
disguised  within  a  host  of  professional  sounding  corporations. 

These  frontmen  will  in  turn  employ  others  who  may  not  even  be 
aware  of  the  LCN  involvement,  but  who  willingly  participate  in  the 
scheme  or  fraud  which  is  contrary  to  the  tribal  interests. 

These  management  companies  utilize  a  number  of  schemes  aimed  at 
skimming  profits.   Th^se  schemes  and  devices  include  managei^pnt  fees, 
shill  players,  rigged  contests,  and  a  host  of  other  scams.   In  the  end 
the  management  firms  end  up  with  the  profit  and  the  Indians  end  up 
holding  the  bag.   My  observations  were  shared  by  Tony  Daniels, 
Assistant  Director,  Criminal  Investigative  Division  of  the  FBI  in  his 
testimony  before  the  U.S.  Senate  in  1989. 

One  example  is  an  LCN  group  in  Florida.   This  group  became 
involved  in  the  control  of  bingo  operations  on  the  Seminole  Indian 
Reservation  in  the  1980s.   The  LCN  used  front  men  utilizing  a  group  of 
management  companies.   This  Miami-based  LCN  found  willing  participants 
in  their  schemes  among  corrupt  tribal  leaders.   This  LCN  group  also 
acquired  direct  interest  in  the  manufacturing  and  sales  of  Indian 
gaming  supplies. 


352 


In  1989,  I  interviewed  a  connected  member  of  the  LCN  who  operated 
gaming  facilities  on  Indian  reservations  for  the  mob.   He  advised  that 
certain  Indian  gaming  operations  were  financed  and  controlled  by 
Anthony  Acceturo,  a  made  member  of  the  LCN.   He  stated  that  in  order 
for  the  mob  to  nold  their  control  over  the  Indians,  three  dissenting 
tribal  leaders  were  killed.   Subsequently,  the  mob  had  no  problems 
getting  the  tribal  leadership  to  fall  in  line. 

In  testimony  before  the  US  Senate  on  February  8,  1989,  a  witness, 
under  the  Witness  Protection  Program,  testified  that  he  skimmed  money 
for  the  Luchese  family  on  the  Barona  reservations.   He  testified  as  an 
example  that  a  $5800  jackpot  on  the  Barona  reservation  was  "won"  by  an 
employee  of  the  paper  supplier  to  the  reservation  in  a  rigged  game. 
He  testified  that  Indian  Bingo  is  open  territory  for  the  mob.   He 
stated  the  mob  is  involved  in  laundering  money  through  Indian 
Reservations.   He  stated  he  had  personal  knowledge  of  twelve  Indian 
Gaming  operations  directly  controlled  by  the  mob. 

ABC's  Morton  Dean  recently  filmed  Eddie  Somuna  as  he  was  managing 
the  Viejas  tribal  gambling  hall  in  California.   Somuna  was  convicted 
of  felony  gambling  crimes  in  Detroit  and  is  an  alleged  mob  associate. 

In  the  meantime,  there  is  no  federal  control  of  Indian  Gaming 
operations.   My  sources  on  Indian  reservations  state  that  nothing  has 
changed.   The  Indian  Gaming  Industry  is  wide  open,  with  no  control. 
Business  as  usual,  the  mob  and  corrupt  tribal  leaders  get  the  gold 
mine  and  the  tribal  members  get  the  shaft. 

#### 


353 

Mr.  Abercrombie.  Thank  you  very  much. 

Mr.  Elroy,  you  mentioned  in  your  testimony  that  you  worked  for 
the  Select  Committee  on  Indian  affairs.  Inasmuch  as  the  law  was 
passed  in  1988,  and  in  effect,  came  into  being  in — for  effective  oper- 
ation in  1989,  did  you — ^you  mentioned  here  about  what  happened 
during  the  1980s.  Does  most  of  your  investigatory  activity  concern 
gaming  activities  prior  to  the  passage  of  the  act  or  the  implementa- 
tion, is  inadequate,  as  you  characterize  it? 

Mr.  Elroy.  I  would  say  that  is  accurate.  In  1989,  we  were  look- 
ing at  this,  and  the  Indian  Gaming  Commission  actually  was  cre- 
ated by  law  at  that  time,  but  they  were  not  operational.  But  my 
point  is  that  assuming  that  the  Indian  Gaming  Commission  desires 
to  do  the  job,  which  I  would  have  no  reason  to  believe  they 
wouldn't,  I  have  some  idea  of  what  it  takes  to  have  oversight  of 
those  type  of  operations. 

Mr.  Abercrombie.  Did  you  say  you  are  retired? 

Mr.  Elroy.  Yes,  sir. 

Mr.  Abercrombie.  Well  then,  you  might  be  available  at  this 
stage,  at  least,  to  consult  or  something  of  that  nature? 

Mr.  Elroy.  I  have  done  some 

Mr.  Abercrombie.  I  don't  mean  that  lightly,  in  other  words,  I  get 
the  thrust  of  your  testimony. 

Mr.  Elroy.  You  can't  do  it  with  30  people,  sir. 

Mr.  Abercrombie.  I  understand  that.  Did  you  have  an  oppor- 
tunity to  investigate,  at  that  time,  what  the  potential  compact  ar- 
rangements might  be,  or  have  you  had  an  opportunity  to  look  at 
the  compact  arrangements  since  then? 

Mr.  Elroy.  I  have  looked  at  some  of  them.  However,  the  problem 
with  the  compact  arrangements,  as  has  been  pointed  out,  is  that 
there  is  very  little  uniformity.  I  think  it  is  even  for  the  State  to  get 
involved.  There  is  a  myriad  of  constitutional  questions  that  deal 
with  the  State  enforcing  the  law  on  these  Indian  reservations. 

Mr.  Abercrombie.  What  about  the  point  that  was  raised  during 
the  testimony  of  Mr.  Palmer,  the  IRS,  and  the  Department  of  Jus- 
tice, that  the  State  of  Nevada  has  at  least  what  purports  to  be  a 
parallel  system  of  auditing  and  investigation  upon  which  the  Fed- 
eral Government  relies,  and  more  particularly,  the  IRS,  and  that 
they  are  now  about  to  undergo  at  least  some  joint  operations. 

I  presume  they  will  take  selected,  random  audits  and  go  over 
them  jointly.  What  would  you  think  about  that  kind  of  a  proposal, 
that  a  similar  kind  of  arrangement  be  put  into  effect  with  the  var- 
ious— within  the  various  compacts,  within  the  various  States  that, 
at  a  minimum,  the  tribes — and  it  had  also  been  suggested  in  other 
testimony — that  the  tribes  would  be  willing  to  put  together  the 
tribal  version  of  the  Nevada  arrangement  and  work  with  the  Fed- 
eral Government? 

Mr.  Elroy.  I  think  that  certainly  the  State  could  cooperate  with 
the  Federal  Government,  if  there  was  an  enabling  legislation  to 
allow  them  to  do  that,  and  in  conjunction  with  sufficient  Federal 
oversight  that  you  might  accomplish  your  task. 

Mr.  Abercrombie.  Would  you  agree  that  it  is  in  the  interests  of 
the  tribes  to  have  a  crime-free  atmosphere,  within  their  interests, 
certainly,  to  be  able  to  address  from  a  public  perception  point  of 


354 

view,  that  they  are  attacking  this  issue  vigorously  and  without  any 
reservation? 

Mr.  Elroy.  It  has  been  my  experience  in  deaUng  on  the  Indian 
reservations  with  the  Indian  people  that  they  are  absolutely  op- 
posed to  corruption  and  organized  crime  on  the  reservation.  I  don't 
remember  anybody  telling  me  they  wanted  that  there.  And  they 
are — and  we  are  talking  about  the  rank-and-file  Indian  people, 
where  they  would  be  very  supportive  of  any  type  of  oversight  that 
would  keep  that  type  of  corruption  out  and  would  return  the  mon- 
ies to  the  benefit  of  the  Indian  people. 

This  does  not  mean  that  there  aren't  some  officials  within  the 
tribe  that  don't  want  to  see  any  of  this  oversight. 

Mr.  Abercrombie.  That  would  be  the  case  in  almost  any  enter- 
prise; right? 

Mr.  Elroy.  Probably  so. 

Mr.  Abercrombie.  What  I  am  looking  for  here,  for  the  purposes 
of  our  legislative  activity,  is  solutions  to  these  kinds  ever  difficul- 
ties, and  so  I  would  think — my  conclusion  from  your  testimony  is 
that  the  route  for  us  to  pursue  legislatively  is  to  see  that  adequate 
enforcement  personnel  are  made  available  and  that  the  compacts 
are  such  that  whatever  State  or  whatever  other  agency  is  involved 
in  the  enforcement  side  is  that  they  be  coordinated  in  such  a  way 
as  to  see  to  it  that  the  tribes  are  not  disadvantaged? 

Mr.  Elroy.  Yes,  sir. 

Mr.  Abercrombie.  Very  good.  Thank  you  very  much. 

STATEMENT  OF  MICHAEL  BROWN 

Mr.  Abercrombie.  Mr.  Brown,  you  are  president  and  CEO  of  a 
casino  in  Connecticut,  right? 

Connecticut  has  been  brought  up  so  many  times  today,  I  am 
sorry  that  you  are  at  the  end  of  the  testimony,  but  perhaps  that 
is  all  to  the  good  because  you  had  an  opportunity  to  hear  a  full 
range  of  discussion  about  Connecticut. 

I  believe  you  are  accompanied  by  Lieutenant  Colonel  Root  of  the 
State  police. 

Mr.  Brown.  That  is  correct. 

Mr.  Abercrombie.  Then  we  will  have  Mr.  Johnson  and  Mr.  Pow- 
ell from  Minnesota. 

But  why  don't  we  go  to  Connecticut  then,  Mr.  Brown  and  Mr. 
Root,  perhaps  you  might  want  to  combine  your  testimony. 

Mr.  Brown.  I  will  give  some  comments,  then  Lieutenant  Colonel 
Root  will  answer  questions,  if  there  are  any. 

Mr.  Abercrombie.  Very  good.  Thank  you  very  much  for  your  pa- 
tience. 

Mr.  Brown.  Thank  you  for  waiting  to  listen  to  us. 

Mr.  Chairman,  I  serve  as  the  President  and  Chief  Executive  Offi- 
cer of  Foxwoods  Casino,  which  is  located  in  southeast  Connecticut. 
It  is  owned  and  operated  by  the  Mashantucket  Pequot  Tribe,  and 
I  emphasize  "operated"  because  there  is  no  management  company. 
We  are  all  employees  of  the  tribe. 

I  previously  served  as  a  prosecutor  for  the  New  Jersey  Attorney 
Genersd's  office  for  nine  years,  and  before  that,  served  for  two  years 
as  a  Director  of  the  Division  of  Gaming  Enforcement  in  New  Jer- 
sey. And  with  the  tribe,  entered  into  the  compact  negotiation  proc- 


355 

ess  with  the  State  of  Connecticut  in  May  of  1990,  they  hired  me 
as  an  attorney  to  assist  them  in  developing  a  strict  regulatory  coop- 
erative effort  between  the  Mashantucket  Pequot  TYibe  and  the 
State  of  Connecticut. 

I  will  dispense  with  any  prepared  remarks  and  just  try  to  sum- 
marize for  you  why  we  believe  that  although  Foxwoods  is  the  larg- 
est casino  in  the  United  States  and  it  is  probably  the  most  finan- 
cially successful  casino  in  the  United  States,  it  is  also  the  most 
highly  regulated  casino  in  the  United  States. 

To  my  right  is  a  chart  which  lists  some  of  the  regulations  that 
are  put  in  place  under  the  compact  that  we  agreed  to  with  the 
State  of  Connecticut.  We  are  regulated  basically  by  four  agencies: 
The  first  agency  is  the  Mashantucket  Pequot  Tribal  Gaming  Com- 
mission, which  supervises  the  on-site  regulation  and  compliance 
with  the  internal  controls  in  the  casino. 

Behind  me  is  George  Henningsen,  who  is  the  Chairman  of  the 
Mashantucket  Pequot  Tribal  Gaming  Commission,  and  for  five 
years  before  that,  he  served  as  the  Deputy  Director  of  Gaming  En- 
forcement in  the  State  of  New  Jersey.  We  imported  a  lot  of  help. 

The  Division  of  Special  Revenue  is  the  agency,  the  State  agency, 
which  licenses  all  people  who  work  in  the  gaming  industry  in  the 
State  of  Connecticut,  and  by  compact  they  must  license  every  per- 
son before  they  can  work  in  Foxwoods  Casino.  I  am  licensed  by  the 
State  of  Connecticut. 

Once  we  file  a  license  application  with  the  State  of  Connecticut, 
it  is  turned  over  to  the  Connecticut  State  Police  that  do  a  back- 
ground investigation  on  the  applicant.  They  report  back  to  Special 
Revenue,  and  the  State  of  Connecticut  Special  Revenue  determines 
whether  or  not  to  issue  a  gaming  license.  They  have  absolute  au- 
thority over  licensing  gaming  employees. 

The  Connecticut  State  Police  by  compact  have  the  authority  to 
enforce  all  of  the  criminal  statutes  of  the  State  of  Connecticut  in 
and  around  the  casino.  They  also  assign  Connecticut  State  Police 
inside  the  facility  24  hours  a  day,  something  that  does  not  exist  in 
any  other  casino  in  the  United  States. 

Mr.  Abercrombie.  Mr.  Brown. 

Mr.  Brown.  Yes. 

Mr.  Abercrombie.  I  have  something  I  have  to  take  care  of  at  a 
quarter  to  three,  which  is  right  now.  If  you  would — and  the  rest  of 
the  panel,  would  excuse  me  for  just  a  few  minutes,  that  can  be 
handled,  and  I  will  be  right  back. 

I  am  sorry  there  are  no  other  Members  to  be  able  to  shift  to,  so 
if  we  could  call  a  recess  for  five  minutes. 

Mr.  Brown.  Thank  you. 

[Recess.] 

Mr.  Abercrombie.  Mr.  Brown,  please  accept  my  apologies.  We 
have  been  able  to  work  things  out.  We  did  not  anticipate  the  length 
of  today's  hearing,  so  a  whole  lot  of  adjustments  had  to  be  made, 
and  I  am  sure,  including  you  folks  on  the  panel.  I  am  very  grateful 
for  your  patience. 

Please  continue. 

Mr.  Brown.  I  will  be  brief. 

After  the  employees  are  licensed  by  the  Division  of  Special  Reve- 
nue, they  are  allowed  to  go  to  work.  We  also  had  State  liquor  con- 


356 

trol  agents  on  site  during  all  hours  of  dispensing  of  alcohol  in  the 
facility.  We  pay  the  entire  cost  of  the  State  regulatory  efforts  in  our 
facility,  which  fiscal  year  1994  is  going  to  equal  $3.8  million. 

With  regard  to  the  contributions  that  we  make  to  the  community, 
we  employ,  as  of  last  Friday,  we  handed  out  paychecks  for  7,150 
people.  Eighty  percent  of  those  people  live  in  the  State  of  Connecti- 
cut. Those  are  jobs  that  did  not  exist  before. 

We  have  an  annualized  payroll  and  benefit  package  cost  of  $202 
million  a  year.  In  January  of  this  year,  the  State  of  Connecticut 
needed  some  additional  money  for  their  treasury,  and  the  tribe 
wished  to  implement  slot  machines,  which  did  not  previously  exist. 
By  a  two-page  written  agreement  between  the  Governor  of  the 
State  of  Connecticut  and  the  Chairman  of  the  Mashantucket 
Pequot  Tribe,  we  agreed  to  guarantee  a  contribution  of  $100  mil- 
lion a  year  to  the  State  of  Connecticut  out  of  our  slot  revenues,  or 
25  percent  of  our  revenue,  whichever  is  greater.  There  is  no  casino 
in  the  United  States  that  gives  $100  million  a  year  off  the  top  to 
the  State  in  which  that  casino  is  located. 

We  have — the  tribe  has  utilized  most  of  the  revenue  from  the  ca- 
sino to  finish  an  expansion  and  pay  for  the  original  building  and 
a  second  casino  hotel  entertainment  complex  which  is  going  to  open 
up  between  now  and  November  1st.  It  has  also  a  state-of-the-art 
child  development  center.  It  is  using  funds  to  build  a  Native  Amer- 
ican museum.  It  has  a  full  health  service  for  tribal  members,  hous- 
ing for  tribal  members,  fire  department,  emergency  medical  serv- 
ices, which  serves  not  only  the  reservation  but  the  surrounding 
communities.  It  has  a  college  tuition  fund  for  any  tribal  men  that 
wishes  to  advance  themselves  further  in  education. 

We  think  that  the  Indian  Gaming  Regulatory  Act  has  been  a  suc- 
cess for  the  Mashantucket  Pequot  Tribe  and  the  community  sur- 
rounding that  reservation  and  for  the  State  of  Connecticut. 

Thank  you. 

Mr.  Abercrombie.  Thank  you  very  much, 

[Prepared  statement  of  Mr.  Brown  follows:] 


357 


TESTIMONY 

OF 

G.  Michael  Brown,  Esquire 

President  &  Chief  Executive  Officer 

Foxwoods  Casino,  Mashantucket  Pequot  Nation 

on 

INDIAN  GAMING  LAW  ENFORCEMENT 

before  the 

SUBCOMMITTEE  ON  NATIVE  AMERICAN  AFFAIRS 

of  the 

HOUSE  COMMITTEE  ON  NATURAL  RESOURCES 

on 

October  5,  1993 


358 


TESTIMONY 

of 

G.  Michael  Brown,  Esquire 

President  and  Chief  Executive  Officer 

Foxwoods  Casino,  Mashantucket   Pequot  Nation 

on 

INDIAN  GAMING   LAW  ENFORCEMENT 

before  the 

SUBCOMMITTEE    ON  NATIVE  AMERICAN   AFFAIRS 

of  the 

HOUSE  COMMITTEE    ON  NATURAL  RESOURCES 

on 

October  5, 1993 

GOOD   MORNING    MR.  CHAIRMAN.     I  AM  MICKEY  BROWN,  PRESIDENT 
AND  CHIEF  EXECUTIVE  OFFICER  FOR  FOXWOODS  CASINO,  WHICH  IS  OWNED 
AND   OPERATED     BY  THE   MASHANTUCKET     PEQUOT    TRIBE    IN  LEDYARD, 
CONNECTICUT.     THE  PEQUOTS    ARE  A  SMALL  BUT  AMBITIOUS    TRIBE  WITH 
APPROXIMATELY      280      MEMBERS,      LOCATED      IN      SOUTHEASTERN 
CONNECTICUT.    PREVIOUSLY,  I  SERVED  AS  A  PROSECUTOR    FOR  NINE  YEARS 
IN  THE  NEW  JERSEY   ATTORNEY   GENERAL'S  OFFICE,  AND  FOR  TWO  YEARS 
AS  DIRECTOR   OF  THE  DIVISION  OF  GAMING  ENFORCEMENT   IN  NEW  JERSEY, 
WHERE  WE  DEVELOPED    WHAT  WE  BEUEVE  IS  A  MODEL  FOR  REGULATING 
CASINO    GAMBLING.        I   HAVE    ALSO    ASSISTED    A    NUMBER     OF    OTHER 
JURISDICTIONS      IN    SETTING     UP    REGULATORY      SYSTEMS,     MOSTLY     IN 
AUSTRALIA.      THE   TRIBE    ASKED    ME  TO  SERVE    AS  HRST   CHAIRMAN    OF 
THEIR   TRIBAL   REGULATORY     AGENCY,   WHICH   I  DID  UNTIL  JANUARY    OF 
1993    WHEN    I  BECAME    FOXWOODS'    PRESIDENT    AND   CHIEF    EXECUTIVE 
OFHCER.     THE  TRIBE  ALSO  HIRED   GEORGE    HENNINGSEN,    WHO  FOR  THE 
PREVIOUS     FIVE    YEARS    HAD    SERVED     AS   DEPUTY    DIRECTOR     OF    THE 
DIVISION  OF  GAMING  ENFORCEMENT    IN  NEW  JERSEY.    GEORGE    SERVES  AS 
THE      FULL-TIME      EXECUTIVE      DIRECTOR      OF     OUR      TRIBAL      GAMING 
COMMISSION.         ACCOMPANYING      ME     IS    MR.     GEORGE      HENNINGSEN, 
EXECUTIVE    DIRECTOR    OF  THE  MASHANTUCKET    PEQUOT  TRIBAL  GAMING 
COMMISSION    AND   LT.  COLONEL    ROBERT    ROOT    OF  THE   CONNECTICUT 
STATE  POUCE.     AT  THE  END  OF  THIS  TESTIMONY,   WE  WILL  BE  HAPPY  TO 
RESPOND     TO    ANY    QUESTIONS     YOU    MAY    HAVE.       FOLLOWING     IS    MY 
TESTIMONY  WHICH  I  SUBMIT  ON  BEHALF  OF  THE  MASHANTUCKET    PEQUOT 
TRIBE  AND  FOXWOODS    CASINO. 

INDIAN  GAMING  REGULATORY    ACT  -IN  SEPTEMBER,   1988. THE  UNITED 


359 


STATES  CONGRESS  CONSIDERED  AND  PASSED  THE  INDIAN  GAMING 
REGULATORY  ACT  ("ACT").  THE  ACT  DEFINES  THE  RIGHTS  OF  INDIAN 
TRIBAL  GOVERNMENTS  TO  CONDUCT  GAMING  ACTIVITIES  ON  THEIR 
FEDERALLY  RECOGNIZED  RESERVATIONS.  THE  ACT  WAS  THE  RESULT  OF 
SEVERAL  YEARS  OF  DISCUSSION  AND  NEGOTIATIONS  BETWEEN  INDIAN 
TRIBES,  STATES,  THE  GAMING  INDUSTRY,  THE  ADMINISTRATION,  AND  THE 
CONGRESS  IN  AN  ATTEMPT  TO  FORMULATE  A  SYSTEM  FOR  REGULATING 
GAMING  ON  INDIAN  LANDS.  THE  ACT  SETS  UP  A  SYSTEM  OF  JOINT 
REGULATION  BY  TRIBES  AND  THE  FEDERAL  GOVERNMENT  FOR  CERTAIN 
GAMING  ON  INDIAN  LANDS  AND  A  SYSTEM  FOR  COMPACTS  BETWEEN 
TRIBES   AND  STATES  FOR  REGULATION    OF  CASINO  GAMING. 

NUMEROUS  INDIAN  TRIBES  THROUGHOUT  THE  UNITED  STATES  HAVE 
ENTERED  INTO  COMPACTS  TO  CONDUCT  CLASS  III  TYPE  GAMING 
ACTIVITIES.  TO  DATE,  78  TRIBAL  STATE  COMPACTS  HAVE  BEEN  APPROVED 
BY  THE  SECRETARY  OF  THE  INTERIOR  TO  ALLOW  TRIBES  SOME  FORM  OF 
CLASS  III  GAMING.  ELEVEN  SUCH  COMPACTS  HAVE  BEEN  APPROVED  IN  THE 
STATE  OF  MINNESOTA,  FOUR  IN  CALIFORNIA,  PLUS  WASHINGTON,  NEVADA, 
NEBRASKA,  SOUTH  DAKOTA  AND  CONNECTICUT.  ADDITIONALLY,  SEVEN  (7) 
COMPACTS  HAVE  BEEN  SIGNED  BY  THE  GOVERNOR  OF  MICHIGAN  AND  ARE 
NOW  PENDING   LEGISLATIVE    APPROVAL. 

AS  YOU  KNOW  FROM  PREVIOUS  HEARINGS,  MINNESOTA  ALONE  HAS 
A  DOZEN  TRIBES  ENGAGED  IN  GAMING  IN  MOSTLY  MID-SIZE  CASINOS 
OFFERING  ONLY  BLACKJACK  AND  VIDEO  MACHINES.  RELATIONS  BETWEEN 
THE  VARIOUS  TRIBES  AND  THE  STATE  OF  MINNESOTA  HAVE  BEEN  VERY 
COOPERATIVE  RESULTING  IN  ENORMOUS  FINANCL\L  SUCCESS  (ESTIMATED 
THAT  GAMING  REVENUES  ON  RESERVATIONS  IN  MINNESOTA  HAVE 
REACHED  IN  EXCESS  OF  $300  MILUON  ANNUALLY),  THE  EUMINATION  OF 
UNEMPLOYMENT  AND  THE  DEVELOPMENT  OF  COMMUNITY  CENTERS, 
HEALTH  CARE  CENTERS  AND  SCHOOLS.  MANY,  MANY  OTHER  TRIBES 
THROUGHOUT  THE  UNITED  STATES  UMIT  THEIR  GAMING  ACTIVITIES  TO 
BINGO  AND  BINGO  RELATED  GAMES  UNDER  CLASS  U  AND  THEREFORE  DO 
NOT  HAVE  A  NEED  TO  NEGOTIATE    A  TRIBAL  STATE  COMPACT. 

MASHANTUCKET  PEOUOT  NATION'S  EXPERIENCE  -  LET  ME  OFFER 
SOME  BACKGROUND  ON  HOW  THE  MASHANTUCKET  PEQUOT  TRIBE 
ENTERED  INDIAN  GAMING.  THE  TRIBE  OCCUPIES  A  RESERVATION  OF 
APPROXIMATELY  1200  ACRES  IN  THE  ROLLING  HILLS  OF  SOUTHEASTERN 
CONNECTICUT,  ABOUT  45  MILES  EAST  OF  HARTFORD  AND  25  MILES  SOUTH 
OF  PROVIDENCE,  RHODE  ISLAND.  THE  TRIBE  OPENED  A  HIGH  STAKES 
BINGO  HALL  IN  1986  IN  AN  EFFORT  TO  SUPPLEMENT  ITS  STATE  AND 
FEDERAL  FUNDING  AND  INCOME  FROM  A  SMALL  SAND  &  GRAVEL 
OPERATION.    THE  TRIBE  INITIALLY  EMPLOYED   ANOTHER   INDIAN  TRIBE  TO 


360 


ASSIST  IN  MANAGING  THE  HALL,  AND  AFTER  TWO  YEARS,  PEQUOT  TRIBAL 
MEMBERS  ASSUMED  FULL  RESPONSIBIUTY  FOR  MANAGEMENT.  THE 
OPERATION  WAS  A  FINANCIAL  SUCCESS  AND  WON  WIDESPREAD  RESPECT 
IN  CONNECTICUT  FOR  ITS  STYLE  AND  PROFESSIONALISM.  THE  TRIBE 
STARTED  THE  BINGO  HALL  WITH  ASSISTANCE  FROM  A  LOAN  GUARANTEE 
BY  THE  BUREAU  OF  INDIAN  AFFAIRS.  THAT  LOAN  WAS  REPAID  IN  FULL  IN 
1991,  AHEAD  OF  TIME,  AND  THE  GUARANTEE  RETURNED  TO  THE  BUREAU. 
(THE  BINGO  OPERATION  NOW  GROSSES  $20  MILLION  PER  YEAR  AND  NETS 
ABOUT  $4  MILLION  ANNUALLY.) 

SHORTLY  AFTER  THE  INDIAN  GAMING  REGULATORY  ACT  PASSED, 
THE  TRIBE  ASKED  CONNECTICUT  TO  ENTER  NEGOTIATIONS  FOR  A  TRIBAL- 
STATE  COMPACT.  AS  CONNECTICUT  PERMITS  GAMES  OF  CHANCE,  ALBEIT 
IN  A  HIGHLY  REGULATED  FORM,  SUCH  GAMING  IS  NOT  IN  CONFLICT  WITH 
THE  STATE'S  PUBLIC  POLICY.  CONNECTICUT  PERMITS  MANY  FORMS  OF 
GAMBLING.  SUCH  AS  A  STATE-OPERATED  LOTTERY,  BINGO,  JAI  ALAI  AND 
VARIOUS  FORMS  OF  PARI-MUTUEL  BETTING  ON  HORSES  AND  DOG  RACES. 
LARGE  AMOUNTS  MAY  BE  BET  AND  SUBSTANTIAL  WINNINGS  ARE 
PERMITTED.  CONNECTICUT  REGULATES,  RATHER  THAN  PROHIBITS, 
GAMBLING  IN  GENERAL  AND  GAMES  OF  CHANCE  IN  PARTICULAR. 
CONNECTICUT  PERMITS  ANY  NONPROFIT  ORGANIZATION,  ASSOCIATION  OR 
CORPORATION  TO  PROMOTE  AND  OPERATE  GAMES  OF  CHANCE,  OR  LAS 
VEGAS  NIGHTS,  TO  RAISE  FUNDS  FOR  THE  PURPOSES  OF  SUCH 
ORGANIZATIONS,  SUBJECT  TO  CERTAIN  LIMITATIONS  AND  RESTRICTIONS, 
SUCH  AS  LIMITS  ON  THE  SIZE  OF  WAGERS,  CHARACTER  OF  PRIZES,  AND 
FREQUENCY  OF  OPERATION.  CONNECTICUT  ANNOUNCED  THAT  IT  WOULD 
NOT  NEGOTIATE  AT  ALL  ABOUT  CASINO  GAMES,  EVEN  THOUGH  SUCH 
GAMES  WERE  PERMITTED  AT  CHARITABLE  LAS  VEGAS  NIGHTS  AND 
CARNIVALS,  AND  EVEN  THOUGH  CONNECTICUT  REGULATES  MORE  THAN 
$1  BILUON  ANNUALLY  IN  OTHER  LEGAL  WAGERING  ACTIVITIES.  THE  TRIBE 
FILED  SUIT  IN  1989  TO  FORCE  THE  STATE  TO  NEGOTIATE.  THE  U.S.  DISTRICT 
COURT  RULED  IN  MAY  OF  1990  THAT  CONNECTICUT  WAS  OBUGATED  TO 
BARGAIN   OVER  ALL  ISSUES,  INCLUDING  CASINO  GAMES. 

FOLLOWING  THAT  INITIAL  COURT  DECISION,  THE  TWO  SIDES  SAT 
DOWN  IN  THE  SUMMER  OF  1990  TO  WORK  OUT  A  COMPACT.  THE  TRIBE 
ASKED  ME  TO  ASSIST  THEM  IN  THESE  NEGOTIATIONS  BECAUSE  OF  MY  OWN 
EXPERIENCE    IN  LAW  ENFORCEMENT    AND  GAMING   REGULATION. 

DURING  THE  SUMMER  OF  1990.  WE  ENGAGED   IN  INTENSIVE,  EARNEST 
BARGAINING     WITH    CONNECTICUT     STATE    OFnCL\LS    TO    WORK    OUT    A 
COMPACT.         THE     TRIBE     WAS     WILLING     TO     ACCEPT,     AND     IN     FACT 
ENCOURAGED,     A  SUBSTANTIAL    STATE   ROLE   IN  HELPING    TO  REGULATE 
GAMING    ON  THE  RESERVATION.      IN  RETURN,    WE  ASKED   THE  STATE  TO 


361 


ACCEPT  THE  TRIBE'S  GOAL  OF  A  COMPACT  WHICH  WOULD  ALLOW  FOR  A 
SINGLE,  SUBSTANTIAL  ECONOMIC  ENTERPRISE  BASED  ON  CASINO  GAMING. 
IN  THE  END,  WE  REACHED  NEARLY  COMPLETE  AGREEMENT  ON  A  COMPACT 
WHICH  PERMITTED  THE  TRIBE  TO  ESTABLISH  A  FULL-SCALE  CASINO,  AND 
TRIBAL  GAMING  REGULATORY  AGENCY,  WHILE  THE  STATE  RETAINED 
POWER  TO  LICENSE  ALL  CASINO  EMPLOYEES  AND  GAMING  SUPPLIERS,  AND 
TO  POLICE  THE  CASINO  ITSELF. 

FOX  WOODS'   REGULATION/LAW     ENFORCEMENT    -  PURSUANT   TO  THE 
COMPACT,    THE    CONNECTICUT     STATE    POLICE    HAVE    JURISDICTION     TO 
ENFORCE     ALL   CONNECTICUT     CRIMINAL    LAWS    ON   THE    RESERVATION, 
INCLUDING  ENFORCEMENT    WITHIN  THE  CASINO.   THE  STATE  POLICE  HAVE 
ACCESS  TO  ALL  LOCKED  AND  SECURED    AREAS  OF  THE  GAMING   FACILITY 
AND  MAY  STATION  TROOPERS    AT  THE  GAMING  FACILITY  TO  COORDINATE 
LAW  ENFORCEMENT     IN  AND  AROUND    THE  CASINO.     THE  CONNECTICUT 
STATE     POLICE     MAY    UNDERTAKE      SUCH    INVESTIGATION      OF    GAMING 
EMPLOYEES    AND  NON-GAMING    EMPLOYEES    AS  IT  DEEMS    APPROPRIATE 
AND  SHALL  ALSO  INVESTIGATE    THE  BACKGROUNDS    OF  GAMING   SERVICE 
APPLICANTS.    THEY  ARE  STATIONED   ON  PROPERTY    24  HOURS   A  DAY.    THE 
COMPACT    COMMITTED     THE    TRIBE    TO    FUNDING    THE    STATE    COST    OF 
REGULATION,    FOLLOWING  THE  NEW  JERSEY  SYSTEM.  THE  STATE  AND  THE 
TRIBE   AGREED    TO  SUBMIT  NEARLY   MATCHING   PROPOSALS   TO  A  COURT- 
APPOINTED    MEDIATOR    SO  THAT  THE  COMPACT  COULD  BE  IMPLEMENTED 
BY  THE  INTERIOR    DEPARTMENT,    WITHOUT   LIMITING   THE  STATE'S  RIGHT 
TO  APPEAL  THE  ORIGINAL  COURT  DECISION.    THE  STATE  DID  APPEAL,  BUT 
THE   DISTRICT   COURT    WAS  UPHELD    BY  A  UNANIMOUS    SECOND   CIRCUIT 
DECISION,  AND  THE  U.S.  SUPREME  COURT  DENIED  CERTIORARI    IN  APRIL  OF 
1991. 

UNDER  THE  COMPACT,  THE  TRIBE  AGREED  TO  ESTABLISH  A 
REGULATORY  COMMISSION  TO  ENFORCE  A  DETAILED  SYSTEM  OF 
MANAGEMENT  CONTROLS  AND  OVERSIGHT.  THE  TRIBAL  GAMING  AGENCY, 
THE  MASHANTUCKET  PEQUOT  GAMING  COMMISSION,  WAS  CREATED  BY 
TRIBAL  ORDINANCE  ON  FEBRUARY  25,  1991.  THE  TRIBAL  GAMING 
COMMISSION  HAS  THE  PRIMARY  RESPONSIBILITY  FOR  ON-SITE  REGULATION 
OF  THE  GAMING  OPERATION  AND  UTILIZES  NON-UNIFORM  INSPECTORS 
WHO  ARE  PRESENT  IN  THE  GAMING  FACILITY  DURING  ALL  HOURS  OF 
OPERATION  AND  WHO  ARE  ACCOUNTABLE  ONLY  TO  THE  TRIBAL  GAMING 
AGENCY.  TRIBAL  GAMING  INSPECTORS  ARE  LICENSED  TO  THE  SAME 
STANDARD  AS  GAMING  EMPLOYEES  BY  THE  STATE  GAMING  AGENCY.  THE 
TRIBAL  GAMING  AGENCY  MUST  DISCLOSE  TO  THE  STATE  GAMING  AGENCY 
THE  PROGRAM  OF  INSTRUCTIONAL  AND  ON-THE-JOB  TRAINING,  SYSTEM  OF 
INTERNAL  ORGANIZATION  INCLUDING  A  COMPENDIUM  OF  ALL  POSITIONS 
FOR  DEALERS    AND  SUPERVISORY    POSITIONS   IN  EACH  TABLE  GAME.    THE 


362 


TRffiAL  GAMING  COMMISSION  MUST  ENSURE  THE  PROPER  TRAINING  AND 
QUALIFICATIONS  FOR  EACH  PERSON  OCCUPYING  A  DESIGNATED  POSITION 
IN  THE  GAMING  FACILITY.  THE  COMMISSION  HAS  APPROVED  AND  ADOPTED 
STANDARDS  OF  OPERATION  AND  MANAGEMENT.  THE  INITIAL  STANDARDS 
OF  OPERATION  AND  MANAGEMENT  ARE  INCLUDED  IN  THE  COMPACT  AS 
APPENDIX   A. 

THE  COMMISSION  MAINTAINS  SURVEILLANCE,  SECURITY,  CASHIER 
CAGE,  CREDIT,  AND  COMPLIMENTARY  SERVICES  LOGS  WHICH  SHALL  BE 
MADE  AVAILABLE  TO  THE  STATE  GAMING  AGENCY  UPON  REQUEST.  THE 
COMMISSION  MAINTAINS  A  LIST  OF  PERSONS  BARRED  FROM  THE  GAMING 
FACILITY  BECAUSE  OF  THEIR  CRIMINAL  HISTORY  OR  ASSOCIATION  WITH 
CAREER  OFFENDERS,  INCLUDING  THE  NEVADA  AND  NEW  JERSEY  BLACK 
LISTS.  THE  COMMISSION  APPROVES  RULES  OF  EACH  GAME  AND  NOTIFIES 
THE  STATE  GAMING   AGENCY   OF  ANY  CHANGES. 

GEORGE  HENNINGSEN  AND  I  HAVE  BEEN  MEETING  WITH  THE  STATE 
POLICE,  THE  F.B.I. ,  AND  OTHER  FEDERAL,  STATE  AND  LOCAL  LAW 
ENFORCEMENT  AGENCIES  TO  COORDINATE  A  LAW  ENFORCEMENT 
STRATEGY  TO  MAKE  SURE  THE  CASINO  IS  AS  RIGOROUSLY  CONTROLLED 
AS  ANY  GAMING  ENTERPRISE  IN  THE  WORLD.  THE  COMMISSION  HAS  ALSO 
BEEN  CONSULTING  WITH  THE  STATE  AGENCIES  TO  REACH  CONSENSUS  ON 
THE  RESOURCES  NEEDED  BY  THE  STATE  TO  ADEQUATELY  POLICE  THE 
CASINO  AND  INVESTIGATE    THE  BACKGROUNDS    OF  CASINO  EMPLOYEES. 

ON  FEBRUARY  15, 1992  THE  MASH ANTUCKET  PEQUOT  NATION  OPENED 
THE  LARGEST  TRIBAL  GAMING  ENTERPRISE  IN  THE  UNITED  STATES 
ESTABUSHED  UNDER  THE  ACT  AND  IT  HAS  NOT  CLOSED  SINCE  OPENING 
DAY.  THE  FOXWOODS  CASINO  CURRENTLY  EMPLOYS  6,720  PEOPLE,  80%  OF 
WHOM  ARE  CONNECTICUT  RESIDENTS.  THE  FOXWOODS  CASINO  HAS  BEEN 
CONSTRUCTED  AT  A  COST  OF  $210  MILLION  WITH  AN  ADDITIONAL  $37 
MILLION  FOR  FURNITURE,  FIXTURES  AND  EQUIPMENT.  BUILT  ADJACENT 
TO  THE  EXISTING  BINGO  HALL,  THE  CASINO  COMPLEX  HAS  TWO 
RESTAURANTS,  A  BUFFET,  A  TRIBAL  GIFT  SHOP,  A  175  ROOM  HOTEL  AND  A 
GAMING  AREA  OF  139,000  SQUARE  FEET,  IN  WHICH  233  TABLE  GAMES  AND 
3,137  SLOT  MACHINES  ARE  LOCATED.  THE  AVERAGE  DAILY  DROP  IS  $4.4 
MILLION  WITH  A  WIN  AVERAGING  $1,625  MILLION  PER  DAY  FOR  ALL 
GAMING. 

WITH  BROAD  SUPPORT  FROM  LOCAL  BUSINESS  AND  LABOR  LEADERS, 
THE  TRIBE  HAS  PLAYED  A  MAJOR  ROLE  IN  REBUILDING  THE  SAGGING 
ECONOMY  OF  SOUTHEASTERN  CONNECTICUT,  WHICH  HAS  BEEN 
SUBSTANTIALLY  DEPENDENT  ON  DEFENSE  SPENDING  IN  RECENT  YEARS. 
THIS  GROWTH    AND  REBUILDING    PROCESS   WILL  CONTINUE   AS  THE  TRIBE 


363 


OPENS  ITS  NEW  312  ROOM  HOTEL,  TWO  NEW  RESTAURANTS,  15  RETAIL 
SHOPS,  HEALTH  CLUB,  POOL,  SPA,  BEAUTY  SALON,  TURBO  RIDE.  360 
THEATER    AND  1,500  SEAT  SHOWROOM    THIS  NOVEMBER. 

COVERING   COSTS  FOR  TRIBAL/STATE    REGULATION    -  THE  CHAIRMAN 
OF    THE    TRIBE,     RICHARD     HAYWARD,     AND    CONNECTICUT     GOVERNOR 
LOWELL  P.  WEICKER  HAVE  SIGNED  A  MEMORANDUM    OF  UNDERSTANDING 
WHICH      COMMITS      THE      TRIBE      TO     FUND      $1.3     MILLION      IN     STATE 
EXPENDITURES    FOR  CASINO  REGULATION .  DURING  THE  FIRST  SIX  MONTHS 
OF    OPERATION.       THE    COST    OF   CONNECTICUT     STATE    POLICE    ON-SITE 
SERVICES   FOR  THEIR   FISCAL  YEAR  1993  PAID  BY  THE  TRIBE  WAS  $1,826,000. 
THIS  IS  IN  ADDITION    TO  THE  REGULATORY     COST  OF  $535,879.00  PAID  TO 
CONNECTICUT   SPECIAL  REVENUE    DIVISION  FOR  FY  93  AND  $344,000.00PAID 
TO  THE  CONNECTICUT   LIQUOR  CONTROL  DIVISION  FOR  COSTS  OF  AGENTS 
WORKING   ON-SITE  DURING   ALL  HOURS   THAT  UQUOR   IS  SERVED. 

ANTICIPATED  REGULATORY  COSTS  TO  BE  PAID  BY  THE  TRIBE  TO  THE 
STATE  IN  FISCAL  YEAR  1994  ARE  AS  FOLLOWS: 

CONNECTICUT    STATE  POLICE  -  $2,339,916; 

CONNECTICUT       SPECIAL      REVENUE       DIVISION      -     $1,002,691     AND 

CONNECTICUT    LIQUOR   CONTROL   -$623,529 

TOTAL  -$3,966,136.00 

COSTS  FOR  TRAFFIC  CONTROL  ARE  ALSO  BORNE  BY  THE  TRIBE.  OFF 
DUTY  CONNECTICUT  STATE  POLICE  SERVE  AS  TRAFFIC  CONTROL  OFFICERS 
FOR  FOXWOODS  WHICH  IS  LOCATED  ON  ROUTE  2  IN  LED  YARD, 
CONNECTICUT.  TRAFFIC  CONTROL  COSTS  FOR  THE  STATE'S  FISCAL  YEAR 
1993  AMOUNTED  TO  $950,000.  FISCAL  YEAR  1994  ESTIMATES  FOR  THOSE 
EXPENSES   ARE  ANTICIPATED   AT  $1.5  MILLION. 

THE  TRIBE  WILL  NOT  EMPLOY  ANY  MANAGEMENT  COMPANY  TO 
OPERATE  THE  CASINO.  FOLLOWING  THE  MODEL  WHICH  IT  USED 
SUCCESSFULLY  TO  MANAGE  ITS  BINGO  HALL,  THE  TRIBE'S  CASINO 
EXECUTIVES  WILL  SERVE  AS  EMPLOYEES  OF  THE  TRIBAL  COUNCIL.  THE 
TRIBE  ORIGINALLY  HIRED  ALFRED  LUCIANI  TO  SERVE  AS  CHIEF 
EXECUTIVE  OF  ITS  GAMING  PROJECT;  MR.  LUCIANI  WAS  IN  THE  NEW  JERSEY 
ATTORNEY  GENERAL'S  OFFICE  FOR  TEN  YEARS,  AND  HELPED  WRITE  THE 
CASINO  CONTROL  ACT  IN  NEW  JERSEY.  AFTER  LEAVING  GOVERNMENT,  HE 
ENTERED  GAMING  MANAGEMENT  AND  SUCCESSFULLY  MANAGED  THE 
GOLDEN  NUGGET  IN  NEW  JERSEY  AND  NEVADA  AND  RESORTS 
INTERNATIONAL  CASINO  IN  ATLANTIC  CITY.  THE  TRIBE  PICKED  MR. 
LUCIANI  BECAUSE  OF  HIS  IMPECCABLE  REPUTATION  FOR  INTEGRITY,  AS 
WELL  AS  HIS  EXPERTISE.     HE  ASSEMBLED   A  TALENTED   EXECUTIVE    TEAM 


364 


INCLUDING  BOTH  TRIBAL  MEMBERS  AND  NON-MEMBERS,  AND  THE  TRIBE 
HAS  TRAINED  LOCAL  RESIDENTS  TO  FILL  SKILLED  POSITIONS  IN  THE  CASINO 
AND  HOTEL  PROPERTIES. 

FOXWOODS'  ECONOMIC  IMPACT  -THE  PEQUOTS'  SUCCESS  IS  A  MODEL 
OF  EFFECTIVE    IMPLEMENTATION    OF  THE  INDIAN  GAMING   REGULATORY 
ACT.    WE  HAVE  A  SOUND   REGULATORY     SYSTEM  IN  PLACE.     INDEED,   WE 
HAVE  PERHAPS  THE  MOST  HIGHLY  REGULATED    CASINO  IN  THE  INDUSTRY, 
UTIUZING     THE    CONNECTICUT     STATE    POLICE,    LIQUOR     CONTROL     AND 
SPECIAL  REVENUE    AGENTS.      THIS  IS  A  FIRST  CLASS  GAMING  ENTERPRISE. 
IT     HAS     PRODUCED      THOUSANDS      OF     JOBS     IN     THE     SURROUNDING 
COMMUNITY,   AND  TENS  OF  MILLIONS  IN  PAYROLL  AND  SERVICES.    IN  THE 
MEMORANDUM     OF  UNDERSTANDING     BETWEEN    THE  PEQUOTS    AND  THE 
STATE  OF  CONNECTICUT,   SIGNED  JANUARY   13, 1993,  THE  TRIBE  AGREED   TO 
PAY  THE  STATE  $100,000,000  AND  RECEIVED    EXCLUSIVITY    FOR  THE  RIGHT 
TO  OPERATE   SLOT  MACHINES  AT  FOXWOODS.    THE  STATE  IS  FREE,  AT  ANY 
TIME,  TO  INTRODUCE    SLOT  MACHINES   ELSEWHERE    IN  THE  STATE  BUT  IF 
THAT  HAPPENS,  THE  TRIBE  DISCONTINUES    THE  SLOT  REVENUE    SHARING. 
ADDITIONALLY,  WHEN  THE  STATE  OF  CONNECTICUT  WAS  SHORT  $13,000,000 
TO  BALANCE  THEIR  BUDGET    THIS  PAST  YEAR,  THE  TRIBE  KICKED  IN  THE 
NECESSARY    AMOUNT    IN  ORDER    TO   ASSIST   THE    STATE    GOVERNMENT. 
UNDOUBTEDLY,     THE    MASHANTUCKET     PEQUOT    TRIBE    IS  THE    LARGEST 
CONTRIBUTOR    TO  THE  STATE  OF  CONNECTICUT'S  COFFERS  AT  THIS  POINT 
IN  TIME.    FOXWOODS   WILL  ENABLE  THE  TRIBE  TO  BECOME  AN  ECONOMIC 
LEADER  IN  ITS  REGION,   AND  TO  REAUZE   ITS  OWN  GOAL  OF  CREATING   AN 
IMPORTANT    RESORT    CENTER,   HIGHLIGHTED     BY  A  MAJOR   MUSEUM    AND 
RESEARCH    CENTER  ON  AMERICAN   INDL^lN  HISTORY   AND  CULTURE. 

A  QUESTION  FREQUENTLY  ASKED  IS  IF  TRIBES  CANNOT  PLEDGE 
ASSETS  AS  COLLATERAL,  HOW  CAN  THEY  OBTAIN  CONSTRUCTION 
FINANCING.  ALMOST  ALL  TRIBES  HAVE  TO  LOOK  OFF  SHORE  AS  THE 
PEQUOTS  DID.  INDL\N  TRIBES  HAVE  THE  RIGHT  TO  ISSUE  TAX  FREE 
MUNICIPAL  TYPE  BONDS.  ALTHOUGH  A  TRIBE  CANNOT  MORTGAGE  LAND 
HELD  IN  FEDERAL  TRUST,  THEY  CAN  PLEDGE  ASSETS,  THE  BUILDING  FF&E 
AS  SECURITY  FOR  A  LOAN,  AND  THEY  CAN  PLEDGE  A  SUCCESS  FEE  IN 
ADDITION  TO  BASE  INTEREST.  DURING  THE  MASHANTUCKET  PEQUOT 
SEARCH  FOR  HNANCING  WHICH  INCLUDED  PRESENTATION  TO  MORE  THAN 
23  BANKING  INSTITUTIONS  IN  THE  UNITED  STATES,  OUR  ONLY  OTHER 
POSSIBLE  SOURCE  FOR  HNANCING  WAS  A  FOREIGN  LONG  TERM  CREDIT 
BANK.  OUR  RELATIONSHIP  HAS  BEEN  FRUITFUL  AND  WAS  BUILT  ON  TRUST. 
THE  NEW  CASINO  EXPANSION  WHICH  OPENED  SEPTEMBER  3,  1993,  WAS 
BUILT  PRIMARILY  OUT  OF  CASH  FLOW  NEGATING  THE  NEED  TO  LOOK  FOR 
ALTERNATIVE  FINANCING.  PROFITS  FROM  FOXWOODS  PAY  FULL  COLLEGE 
TUITION     FOR     MASHANTUCKET      PEQUOT     TRIBAL     MEMBERS,     PROVIDE 


365 


QUAUTY  HOUSING,  A  STATE  OF  THE  ART  CHILD  DEVELOPMENT  CENTER, 
A  TRIBAL  POLICE  DEPARTMENT,  EMERGENCY  MEDICAL  SERVICES 
DEPARTMENT,  TRIBAL  TORT  COURT,  PARKS  AND  RECREATION 
DEPARTMENT,  TRIBAL  LOAN  PROGRAM,  SUPPLEMENTS  THE  TRIBAL  HEALTH 
AND  SOCIAL  SERVICES  DIVISION  AND  PROVIDES  A  HOST  OF  OTHER 
SERVICES. 

FOR  TRIBES  ACROSS  THE  UNITED  STATES  THE  ACT  IS  PROVIDING  THE 
MOST  EFFECTIVE  BOOST  TO  TRIBAL  ECONOMIC  DEVELOPMENT  OF  ANY 
STRATEGY    ATTEMPTED    BY  THE  FEDERAL   GOVERNMENT. 

IF  YOU  WISH  TO  EXPERIENCE  FIRST  HAND  THE  ULTIMATE  SUCCESS 
STORY  OF  INDIAN  GAMING  AND  THE  BENEFITS  ENJOYED  BY  THE  TRIBE, 
THE  COMMUNITY   AND  THE  STATE,  WE  INVITE  YOU  TO  VISIT  FOXWOODS. 


366 


NEVADA        FOXWOODS       NEW  JERSEY 

Mandatory  licensure 

for  all  Casino  employees         NO  YES  YES 

Federal  regulatory 

oversight  NO  YES  NO 

Mandatory  regulatory 
oversight  during  all 
hours  of  operation  NO  YES  YES 

On  site  police  presence 

during  all  hours  of 

operation  NO  YES  NO 

Liquor  Control  agents 

on  site  during  all  hours 

alcoholic  beverages  are 

served  NO  YES  NO 

Exhaustive  State  back- 
ground investigation  of 
all  Casino  executives  NO  YES  YES 

Mandatory  yearly  audit 

by  outside  auditing  firm         NO  YES  YES 


367 

THE  ECONOMIC  IMPACTS 
OF  THE  FOXWOODS  HIGH  STAKES  BINGO  &  CASIWO 
ON  NEW  LONDON  COUNTY  AND  SURROUNDING  AREAS 

by 

Arthur  W.  Wright  &   Associates! 


John  M.  Clapp 

Dennis  R.  Heffley 

Subhash  C.  Ray 

Jon  Vilasuso 

Arthur  W.  Wright 


September  1993 


368 


TABLE  OF  CONTENTS 


(A)  Key  Findings  and  Executive  Summary 

(B)  The  Economic  Impact  of  Foxwoods  High 
Stakes  Bingo  &  Casino  on  New  London 
County  and  Surrounding  Areas 


Page  ii 


INTRODUCTION 

I.  Employment  Effects 

II.  Public  Assistance  (AFDC) 

III.  Housing  Prices 

IV.  Summary  and  Conclusions 


Page  1 
Page  4 
Page  9 
Page  11 
Page  15 


(C)  The  Impact  of  a  Change  in  Basic  Employment 
Within  One  LMA  on  House  Values  in  the  Same 
and  Surrounding  LMA' s 

(D)  Economic  Base  Analysis  for  New  London 
County 

(E)  Determinants  of  Welfare  Dependence 

(F)  Biographies  of  Principals 


Appendix  1 

Appendix  2 
Appendix  3 
Appendix  4 


369 


KEY    FIHDIHGS    AHP    EXECUTIVE    SUMMARY 


THE  ECONOMIC  IMPACTS  OF  THE  FOXWOODS  HIGH  STAKES  BINGO  &  CASINO 

ON  NEW  LONDON  COUNTY  AND  SURROUNDING  AREAS 

by 

Arthur  W.  Wright  &  Associates; 

John  M.  Clapp 

Dennis  R.  Heffley 

Subhash  C.  Ray 

Jon  Vilasuso 

Arthur  W.  Wright 

September  1993 


KEY    FINDINGS 

"     Every  new  Foxwoods  job  supports  1.107  additional  non- 
casino  jobs  in  New  London  County.   At  Foxwoods'  currently  planned 
total  employment,  that  will  eventually  mean  more  than  20,000 
total  new  jobs  in  the  county,  with  an  annual  payroll  of  nearly 
$480  million. 

°  Every  new  Foxwoods  job  supports  0.74  new  jobs  in  the  rest 
of  Connecticut.   That  will  eventually  translate  into  more  than 
7,000  new  jobs,  with  an  annual  payroll  of  more  than  $214  million. 

*•  Every  new  job  trims  0.154-0.260  recipients  from  AFDC 
rolls.   Thus,  employment  gains  from  Foxwoods'  activities  will 
save  the  State  $9. 6-$ 16  million  per  year. 

°  Each  decline  of  1  point  in  the  unemployment  rate  in 
eastern  Connecticut  is  accompanied  by  a  7.7  percent  increase  in 
the  real  prices  of  houses.   Foxwoods  employment  alone  could  raise 
total  residential  real  estate  values  by  almost  $1.2  billion  by 
the  end  of  1994.   Adding  indirect  employment,  the  total  increase 
could  come  to  more  than  $6  billion  by  the  end  of  the  decade. 


370 


ECONOMIC  IMPACTS  OF  FOXWOODS 
KEY  FINDINGS  &  EXECUTIVE  SUMMARY 
-2- 


EXECUTIVE     SUMMARY 


The  rapid  success  of  Foxwoods  High  Stakes  Bingo  &  Casino  has 
brought  growing  pains  to  southeastern  Connecticut,  but  it  has  also 
provided  new  jobs  paying  an  average  of  $25,000  per  year  and  another 
$9,300  a  year  in  fringes.  That  success  has  also  afforded  direct 
material  benefits  to  the  casino's  owner  (the  Mashantucket  Pequots), 
to  the  State  of  Connecticut,  and  to  construction  firms  and  workers. 
Indirectly,  it  has  helped  brighten  regional  prospects  for  tourism. 

This  report  deals  with  three  more  fundamental  indirect  impacts 
of  Foxwoods : 

I.  additional  jobs  and  incomes  in  surrounding  areas 

II.  lower  spending  on  public  assistance  (AFDC) 

III.  higher  real  values  of  single-family  houses. 


I.  Employment  and  Earnings;  Applying  economic  base  analysis, 
we  estimate  that  every  new  Foxwoods  job  will  eventually  support 
1.107  additional  non-casino  jobs  in  New  London  County.  The  average 
job  in  the  county  pays  nearly  $23,000  (1993  dollars).  The  combined 
effect  of  the  full  9,500  Foxwoods  employees  expected  by  early  1994 
is  20,017  new  jobs  in  New  London  County.  The  total  new  payroll 
generated  will  be  $478.5  million  per  year. 

Further,  because  county  residents  spend  part  of  their  incomes 
on  "imports"  from  other  Connecticut  counties,  we  estimate  that  a 
new  Foxwoods  job  ultimately  generates  as  much  as  a  further  0.74  new 
job  in  the  rest  of  the  state,  where  the  average  job  pays  about 
$30,500  a  year.  The  full  9,500  Foxwoods  employees,  then,  will 
support  up  to  an  added  7,030  jobs  in  the  rest  of  the  state,  with 
added  payroll  of  $214.4  million.  "Leakages"  to  other  states  and 
countries  will  reduce  these  figures  somewhat,  but  offsetting  gains 
in  those  "foreign"  areas  (especially  Rhode  Island),  in  turn  meaning 
added  purchases  from  Connecticut,  will  make  up  much  of  the 
reduction. 


371 


ECONOMIC  IMPACTS  OF  FOXWOODS 
KEZ  FINDINGS  &  EXECUTIVE  SUMMARY 
-3- 

II.  Aid  for  Dependent  Children;  Using  econometric  techniques 
on  U.S.  state  data,  we  estimate  that  each  additional  job  created 
trims  0.154-0.260  recipients  from  the  rolls  of  Aid  For  Dependent 
Children  (AFDC).  The  figure  appears  to  be  higher,  the  more  robust 
the  overall  economy;  conversely,  a  slacker  economy  tends  to  yield 
the  lower  figure.  Assuming  (to  be  conservative)  an  average  AFDC 
payment  of  $200  per  month  per  recipient  and  a  total  of  26,000  new 
jobs  in  Connecticut  because  of  Foxwoods,  the  estimated  savings 
would  range  from  $9.61  million  to  $16.20  million  per  year,  based  on 
an  estimated  reduction  in  AFDC  recipients  of  4,004-6,760  people. 

III.  House  Prices;  Again  using  econometric  techniques,  we 
estimate  that  (over  the  long  run)  every  1  percentage-point 
reduction  in  the  unemployment  rate  in  the  four  easternmost  Labor 
Market  Areas  (LMAs)  in  Connecticut  is  associated  with  a  7.7  percent 
increase  in  real  housing  prices  (after  inflation)  in  the  four  LMAs. 
Translating  Foxwoods'  employment  impacts  into  reductions  in  LMA 
unemployment  rates,  we  conclude  that,  just  from  the  casino's  hiring 
alone,  real  house  prices  in  the  4  LMAs  will  rise  by  $1,177  billion 
by  late  1994.  Further,  adding  indirect  employment  effects  raises 
the  total  increase  in  house  prices  to  $6.1  billion  by  the  end  of 
the  decade. 


372 


THE  ECONOMIC  IMPACTS  OF  THE  FOXWOODS  HIGH  STAKES  BINGO  &  CASINO 

ON  NEW  LONDON  COUNTY  AND  SURROUNDING  AREAS 

by 

Arthur  W.  Wright  &  Associates^ 

INTRODUCTION 

Foxwoods  High  Stakes  Bingo  &  Casino,  located  near  Ledyard, 
Connecticut,  has  enjoyed  round-the-clock  operations  and  financial 
success  from  the  day  its  doors  opened  in  early  1992.  The  venture 
has  expanded  steadily  —  the  latest  additions  opened  this  month, 
with  more  to  follow  by  year's  end  —  and  plans  for  further  growth 
are  underway.  A  recent  New  York  Times  article  (September  1,  1993, 
p.  B1+)  characterized  Foxwoods  as  "the  region's  clear  center  of 
gravity. " 

The  casino's  rapid  success  has  brought  growing  pains,  as  a 
quiet,  rural  part  of  the  state  struggles  to  adapt  to  growing 
numbers  of  visitors  and  a  burst  of  new  economic  activity.  On  the 
plus  side,  though,  in  an  area  hard  hit  by  defense  cuts,  Foxwoods 
has  already  provided  more  than  6,000  new  jobs,  and  total  employment 
will  exceed  9,500  once  current  plans  are  complete.  The  average 
gross  pay  of  casino  employees  (including  reported  tips)  is  $25,000 
per  year  —  about  $2,100  more  than  the  average  job  paid  in  New 
London  County  before  February  1992  —  and  average  fringe  benefits 
add  $9,300  a  year  to  total  employee  compensation.^   The  casino's 


^  John  M.  Clapp,  Dennis  R.  Heffley,  Subhash  C.  Ray,  Jon 
Vilasuso,  and  Arthur  W.  Wright.  We  acknowledge  with  thanks  the 
assistance  of  Peter  Shapiro  &  Associates.  Responsibility  for  any 
errors  remains  with  us. 

^  Based  on  full-time  equivalent  employees,  Foxwoods  data  for 
April  1,  1993,  show  yearly  "salary  &  wages,"  inclusive  of  "tips  and 
tokes"  (dealers'  tips)  reported  to  management,  of  $25,043  on 
average,  excluding  paid  leaves.  Average  fringes  (including  paid 
leaves,  required  social  prograjns,  group  insurance  programs, 
retirement  matching  contributions,  and  employee  meals)  come  to 
$9,334.  The  sum  of  salary  &  wages  plus  fringes  is  $34,378.  To  the 
extent  not  all  tips  are  reported,  this  figure  understates  total 


373 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-2- 

owner,  the  Mashantucket  Pequot  tribe,  has  been  able  to  improve  the 
living  standards  of  its  members,  and  to  start  new,  ancillary 
businesses.  The  State  of  Connecticut  has  used  revenue-sharing  from 
slot-machine  proceeds  to  increase  its  aid  to  the  state's  169  cities 
and  towns •  Construction  of  the  various  phases  of  Foxwoods ' 
development  has  employed  workers  from  across  the  state  and  around 
the  region. 

The  economic  impacts  of  the  casino  do  not  end  with  the  direct 
effects  just  listed.  Like  the  ripples  from  a  stone  thrown  into  a 
pool  of  water,  increased  hiring  and  income  are  radiating  from 
Foxwoods '  own  activities  to  other  economic  sectors  and  to  other 
areas  (local,  state  and  regional).  Indirect  spillovers  from  the 
casino's  growth  include  not  only  brightened  prospects  for  tourism 
in  the  region  but  also  (more  fundamentally)  additional  jobs  and 
incomes,  reduced  unemployment,  lower  spending  on  public  assistance, 
and  higher  real  estate  values  in  surrounding  areas. 

This  report  focuses  on  three  specific  indirect  impacts  of 
Foxwoods:  I.  employment;  II.  public  assistance  (AFDC);  and  III. 
prices  of  single-feimily  housing.  While  these  three  topics  do  not 
exhaust  the  indirect  impacts  of  the  casino's  operations,^  they  are 
likely  to  be  the  most  significant  ones. 

I.  Employment ;  Applying  recognized  tools  of  economic-impact 
analysis,  we  estimate  that  every  new  Foxwoods  job  supports  roughly 
1.1  additional  non-casino  jobs  in  New  London  County.  The  average 
job  in  the  county  before  the  casino  opened  paid  nearly  $23,000  in 
1993  dollars.   Further,  because  county  residents  spend  part  of 


average  employee  compensation. 

^  For  instance,  we  have  not  explored  the  indirect  effects  of 
construction  activity,  which  by  nature  takes  place  over  a  fixed 
period  of  time  and  then  ends.  Nor  have  we  expressly  studied  the 
spillover  effects  from  casino  purchases  of  goods  and  services;  to 
a  considerable  extent,  however,  our  analysis  of  indirect  job 
creation  captures  those  effects. 


374 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-3- 

their  incomes  on  "imports"  from  other  Connecticut  counties,  a  new 
Foxwoods  job  ultimately  generates  a  further  three-quarters  of  a  new 
job  in  the  rest  of  the  state,  where  the  average  job  paid  about 
$30,500.  Lesser  but  still  noticeable  employment  spillovers  occur 
in  Rhode  Island,  by  similar  reasoning. 

II.  Public  Assistance  (AFDC);  With  conventional  econometric 
techniques  we  estimate  that  (by  increasing  employment  in  a  multi- 
county  region)  an  additional  1,000  jobs  trims  between  154  and  260 
recipients  (adults  and  children)  from  the  rolls  of  Aid  For 
Dependent  Children  (AFDC)  in  that  region.  The  figure  appears  to  be 
higher,  the  more  robust  the  overall  economy;  conversely,  a  slacker 
economy  tends  to  yield  the  lower  figure.  Assuming  a  conservatively 
low  average  AFDC  payment  of  $200  per  month  per  recipient,  the 
creation  of  1,000  new  jobs,  directly  at  Foxwoods  or  indirectly  by 
casino  expansion,  would  save  an  estimated  $30,800  to  $52,000  per 
month,  or  $369,600  to  $624,000  per  year  in  AFDC  payments. 

III.  House  Prices;  Again  using  econometric  analysis,  we 
estimate  that  (over  the  long  run)  every  1  percentage-point 
reduction  in  the  unemployment  rate  in  the  four  easternmost  Labor 
Market  Areas  (LMAs)  in  Connecticut*  is  associated  with  a  better 
than  7.7  percent  increase  in  real  housing  prices  (after  inflation) 
in  the  four  LMAs.  Hence,  if  the  employment  stimulus  (indirect  as 
well  as  direct)  from  Foxwoods  hiring  reduced  the  regional 
unemployment  rate  by  4  points,  the  price  of  a  representative  house 
worth  (say)  $100,000  today  would  ultimately  rise  by  more  than 
$30,000.  This  is  a  gross  effect:  We  do  not  take  into  account  other 
economic  forces  ( such  as  Navy  submarine  procurement  and  force 
levels)  that  will  also  affect  house  prices.  But  the  stout  upward 
pressure  on  house  prices  from  casino  expansion  should  be  welcome  in 


*  New  London-Norwich,  Danielson,  Willimantic  and  Lower  River. 


375 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-4- 


an  area  that  has  suffered  steephouse-price  declines  —  in  New 
London-Norwich  on  the  order  of  36  percent  —  since  the  late  1980s. 

I.  EMPLOYMENT  EFFECTS 

A.  Indirect  Job  Creation  in  New  London  County 

Why  would  we  expect  to  find  additional  hiring  in  the  local 
economy  as  a  result  of  the  expansion  of  employment  at  Foxwoods? 
Because  the  services  provided  by  casino  workers  consist  largely  of 
"exports"  outside  the  county:  Most  customers  come  from  other  parts 
of  Connecticut  and  other  states;  their  expenditures  at  Foxwoods 
represent  an  inflow  of  income  to  New  London  County.  Thus,  the 
casino  jobs  support  additional  local  jobs  directed  to  satisfying 
the  day-to-day  consumption  needs  of  casino  employees.  In  contrast, 
if  Foxwoods  customers  came  mainly  from  New  London  County,  local 
purchasing  power  would  simply  be  recirculating  —  and  casino  growth 
would  create  far  fewer  additional  jobs. 

To  get  at  the  extent  of  indirect  job  creation  arising  from 
casino  employment,  we  used  a  well-known  technique  called  economic 
base  analysis.^  This  technique  focuses  on  measuring  how  much  of 
local  economic  activity  is  "basic"  —  that  is,  involved  in 
exporting  goods  and  services  outside  the  locale  —  and  therefore 
capable  of  supporting  additional,  "non-basic"  (or  local) 
employment.  Combining  information  on  the  basic/non-basic  mix  for 
all  local  economic  sectors,*  we  can  calculate  a  multiplier  that 


^  For  the  technical  methodology  and  detailed  calculations  for 
our  economic  base  analysis,  see  the  separate  document,  "Economic 
Base  Analysis  for  New  London  County,"  by  Jon  Vilasuso. 

*  Excluding  the  military.  We  assume  that  the  military 
employment  at  the  Groton  Submarine  Base  serves  the  entire  United 
States  and  not  just  the  residents  of  New  London  County.  In  other 
words,  the  county's  consumption  of  Groton  sub  base  services  is  no 
greater  per  capita  than  that  of  San  Diego  residents. 


376 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 

-5- 

expresses  the  extent  to  which  additional  basic  employment  will 
support  additional  non-basic  employment  in  the  locale. 

We  estimate  that  creating  one  new  basic  job  in  New  London 
County  will  lead  to  an  additional  1.23  non-basic  jobs  there.  Thus, 
the  total  new  employment  equals  the  new  basic  job  plus  1.23  local 
jobs,  or  a  total  of  2.23  new  jobs.  If  the  new  basic  job  was  an 
average  job  at  Foxwoods,  it  would  generate  additional  income  of 
some  $25,000  in  1993  dollars  (as  noted  earlier).'  If  the  attendant 
1.23  non-basic  jobs  paid  the  average  for  New  London  County,^  the 
extra  non-basic  earnings  would  come  to  $28,173  (also  in  1993 
dollars).  The  total  gain  in  county  earnings  would  then  be  $53,173. 

The  foregoing  analysis  needs  one  adjustment.  If  some  Foxwoods 
customers  come  from  New  London  County,  one  new  casino  job  would  not 
equal  a  full  basic  job.  In  fact,  company  analyses  of  customers' 
license  plates  and  special  club  members'  addresses  indicate  that 
nearly  all  of  Foxwoods'  business  comes  from  outside  the  county.  To 
be  conservative,  let  us  assume  that  only  90  percent  of  casino 
revenues  come  from  outside  New  London  County.  The  multiplier  would 
then  decline  from  1.23  to  1.107.'  The  Foxwoods  addition  to  county 
earnings  would  remain  the  same  ($25,500),  but  the  extra  non-basic 
earnings  would  decline  to  $25,355  in  1993  dollars,  giving  a 
somewhat  smaller  total  earnings  gain  of  $50,355. 

How  does  the  foregoing  analysis  translate  into  a  total  impact 


'  We  ignore  the  average  fringes  of  $9,300,  which  equal  an 
added  27.1  percent  of  the  salary- & -wages  figure. 

^  According  to  data  in  the  1990  edition  of  County  Business 
Patterns,  adjusted  to  1993  dollars  by  multiplying  by  the  ratio  of 
the  1993  to  the  1990  Consumer  Price  Indexes. 

'  The  magnitude  of  the  decline  increases  with  the  portion  of 
revenues  coming  from  within  the  locale.  For  the  detailed 
calculation  of  the  decline,  see  the  Appendix  to  Vilasuso,  op.cit. 


377 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-6- 

of  Foxwoods  on  employment  in  New  London  County?^°  Still  asstiming 
that  90  percent  of  casino  activity  is  basic,  if  the  employment 
multiplier  holds  over  the  full  range  of  Foxwoods '  hiring  from  its 
inception  (February  1992)  through  the  completion  of  current 
expansion  plans,  9,500  casino  jobs  will  ultimately  generate  an 
additional  10,517  jobs,  or  20,017  in  all,  in  New  London  County." 
If  the  new  non-basic  jobs  pay  the  1993  average  figure,  the 
additional  earnings  will  come  to  $241  million  (in  1993  dollars). 
Adding  $237.5  million  in  direct  Foxwoods  payroll  (9,500  times 
$25,000)  gives  a  total  county  payroll  increase  of  $478.5  million. 


B.  Indirect  Employment  Effects  in  the  Rest  of  Connecticut 

Why  would  gains  in  employment  in  New  London  County  affect 
employment  in  the  rest  of  the  state?  Because  the  county  is  linked 
economically  with  the  other  counties  in  Connecticut.  When  economic 
activity  picks  up  in  New  London  County,  its  residents  resort  to 
"imports"   for   a   significant   proportion   of   their   increased 


^°  That  total  impact,  and  the  others  discussed  in  this  report, 
will  occur  gradually  over  time,  not  immediately.  Economic  base 
analysis  provides  no  insight  into  the  duration  or  time  pattern  of 
the  lags  in  the  estimated  impacts.  With  the  later  regression 
analysis,  we  are  able  in  one  case  to  obtain  some  idea  of  the  length 
of  at  least  the  initial  lag  following  the  event  of  interest  — 
here,  an  increase  in  hiring  at  Foxwoods. 

"  The  range  of  validity  of  our  estimated  multiplier  depends 
mainly  on  how  large  the  casino's  total  hiring  is  in  relation  to 
total  county  employment.  In  1993,  total  employment  in  the  New 
London-Norwich  LMA  —  roughly  coterminous  with  New  London  County 
except  for  several  small  towns  at  the  edge  of  the  LMA  —  was  about 
177,000  excluding  Foxwoods'  employees.  Thus,  the  9,500  workers  at 
Foxwoods  represent  a  5.4  percent  increase  over  the  base  excluding 
the  casino.  Note  that  not  all  of  the  indirect  job  creation  from 
casino  expansion  will  have  occurred  by  the  end  of  1993.  As  noted 
in  the  preceding  footnote,  the  full  adjustment  of  the  indirect  jobs 
will  probably  extend  over  a  number  of  years. 


378 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-7- 

consumption  needs. *^  By  extending  our  previous  methodology,  we  can 
translate  those  imports  into  the  added  indirect  employment  in  the 
rest  of  Connecticut  that  will  flow  from  Foxwoods'  expansion, 
coupled  with  its  indirect  impacts  in  New  London  County. 

For  simplicity,  and  recognizing  that  we  will  be  overstating 
the  effect,  let  us  assvune  initially  that  residents  of  New  London 
County  obtain  all  of  their  imports  —  the  portion  of  their 
consumption  needs  not  produced  within  the  county  —  from  other 
parts  of  Connecticut.  The  first  step  is  to  translate  the  earlier 
total  increase  in  New  London  County  employment  from  casino  hiring 
into  an  increase  in  basic  jobs  elsewhere  in  the  state.  Basic  jobs 
will  increase  in  the  rest  of  Connecticut  because  it  will  be 
"exporting"  goods  to  New  London  County.  The  second  step  is  then  to 
calculate  the  non-basic/basic  multiplier  for  the  rest  of  the  state, 
just  as  we  did  in  section  A  for  the  one  county.  We  estimate  that 
each  new  job  created  at  Foxwoods  translates  into  0.74  additional 
job  in  the  other  counties  of  Connecticut  taken  as  a  whole.  At  the 
average  1990  pay  per  job  in  the  rest  of  the  state  of  $30,501 
(stated  in  1993  dollars),  the  associated  increase  in  earnings  would 
come  to  $22,571.  The  eventual  total  of  9,500  casino  jobs  would 
yield  7,030  new  jobs,  and  additional  income  of  some  $214.4  million, 
throughout  the  rest  of  Connecticut. 

These  estimates  overstate  the  employment  and  earnings  impacts 
of  Foxwoods'  expansion  in  the  rest  of  Connecticut  for  a  simple 
reason:  New  London  County  residents  in  fact  do  "import"  goods  and 
services  from  other  states,  and  even  other  countries.  To  the 
extent  they  do  so,  part  of  the  Foxwoods  impacts  just  exaunined  will 
leak  out  of  Connecticut,  thus  reducing  the  figures  just  reported. 
At  the  same  time,  we  must  recognize  a  countervailing  effect  that 
will  offset  the  reduction.   When  New  London  County  residents  buy 


^^  Indeed,  New  London  County  is  also  linked  with  economies 
outside  Connecticut  as  well.  Below,  we  factor  the  additional  links 
into  the  analysis. 


379 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-8- 


goods  and  services  from  outside  Connecticut,  the  "foreigners"  (in 
Rhode  Island,  France,  and  so  on)  enjoy  some  job  creation  and  income 
growth  of  their  own.  The  foreigners  in  turn  will  buy  goods  and 
services  from  Connecticut  —  with  job-creating  and  income-enhancing 
effects  there,  too.  We  have  not  undertaken  the  major  task  of 
gauging  the  net  result  of  the  two  opposing  forces.  But  we  can 
state  that,  even  if  the  net  leakage  out  of  Connecticut  were  as  high 
as  one-half  (which  we  doubt),  the  success  of  Foxwoods  has  had  and 
will  continue  to  have  a  major  positive  impact  on  jobs  and  earnings 
in  Connecticut  outside  New  London  County. 

C.  Direct  and  Indirect  Employment  Effects  in  Adjoining  States 

Why  would  Foxwoods'  rapid  success  affect  Rhode  Island  and 
Massachusetts?  For  two  reasons:  First,  not  everyone  working  at 
the  casino  is  a  New  London  County  or  even  a  Connecticut  resident. 
Second,  some  of  the  indirect  effects  of  Foxwoods'  hiring  doubtless 
spill  across  the  nearby  borders  with  Rhode  Island  and 
Massachusetts.*^  To  this  point,  we  have  tacitly  assumed  that  all 
Foxwoods  employees  reside  in  Connecticut.  In  fact,  nearly  20 
percent  of  the  casino  workforce  in  mid-1993  had  addresses  in  Rhode 
Island  or  Massachusetts;  most  of  those  addresses  were  in  the  former 
state.**  We  have  not  attempted  to  estimate  employment  multipliers 
and  their  associated  earnings  impacts  separately  for  Rhode  Island 
and  Massachusetts.  However,  given  the  near-lack  of  barriers  to 
movements  of  people  and  goods  across  state  lines,  it  is  safe  to  say 


*^  We  could  include  New  York  as  well.  However,  the  distance 
(100+  miles)  between  Foxwoods  and  the  western  boundary  of 
Connecticut  is  a  barrier  to  the  direct  hiring  of  New  Yorkers  and 
probeibly  greatly  weakens  the  indirect  spillovers  as  well. 

"  An  analysis  of  employee  address  zip  codes  for  mid-1993 
(4,476  total  employees)  shows  64.4  percent  in  the  New  London- 
Norwich  LMA,  and  another  15.6  percent  in  other  parts  of 
Connecticut,  giving  a  state  total  of  80.0  percent.  Further,  17.8 
percent  of  the  addresses  are  in  Rhode  Island,  just  under  1  percent 
in  Massachusetts,  and  0.2  percent  in  New  York. 


380 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-9- 

that  the  results  reported  above  for  Connecticut  apply  qualitatively 
to  Rhode  Island  and  (to  a  much  lesser  extent)  Massachusetts.  At 
the  same  time,  it  is  true  that  the  force  of  our  estimated  impacts 
on  Connecticut  is  less  than  stated  earlier,  to  the  extent  that 
other  states  benefit  from  the  increased  economic  activity  at 
Foxwoods . 


II.   PUBLIC  ASSISTANCE  (AFDC) 

Why  would  the  rapid  growth  of  Foxwoods  affect  public  assist- 
ance programs?  Because  (as  we  have  seen)  casino  employment  creates 
additional  jobs  in  both  nearby  towns  and  throughout  the  surrounding 
region.  Economic  theory  suggests  that  new  employment  opportunities 
will  attract  some  people  currently  on  welfare  and  thus  lower  the 
numbers  of  people  on  public  assistance.  Hence,  we  would  expect  the 
addition  of  9,500  jobs  at  Foxwoods  to  reduce  the  number  of  welfare 
recipients  and  the  attendant  fiscal  burden  on  government. 

To  test  this  proposition,  we  applied  least-squares  regression 
techniques  to  data  on  the  numbers  of  recipients  of  Aid  For 
Dependent  Children  (AFDC)  and  on  total  employment,  adding  (for 
control  purposes)  other  explanatory  factors  such  as  population  and 
the  size  of  the  average  welfare  payment  per  client.^*  Clients 
include  both  adults  and  children;  thus  one  household  would 
typically  have  at  least  two  recipients.  We  used  statewide  data  for 
all  50  states;^*  however,  the  results  are  robust,  and  we  have  not 


'*  For  the  technical  methodology  and  detailed  calculations  of 
our  regression  analysis  of  the  relation  between  welfare  and 
employment,  see  the  separate  document,  "Determinants  of  Welfare 
Dependence:  A  Study  of  Caseloads,"  by  Subhash  C.  Ray. 

'®  A  regression  on  time  series  data  for  the  whole  United 
States,  1960-1987,  yielded  a  similar  estimate  of  the  relationship 
between  employment  and  welfare  rolls.  We  attempted  to  obtain  data 
by  town  for  Connecticut  from  the  State  Department  of  Income 


381 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-10- 

f  ound  any  reason  to  think  that  Connecticut  is  fundamentally 
different  from  the  national  average,  once  one  controls  for 
population  and  payment  levels. 

Estimates  based  on  state  data  for  1987,  1988  and  1989  indicate 
a  statistically  significant  negative  relationship  between 
employment  and  the  number  of  welfare  recipients.  For  1987,  the 
estimated  coefficient  suggests  that  1,000  new  jobs  would  reduce 
state  AFDC  rolls  by  an  average  of  260  people.  The  results  for  1988 
and  1989,  as  individual  years,  show  comparable  but  statistically 
weaker  and  smaller  relationships;  however,  combining  data  for  the 
two  years  yields  a  strongly  significant,  and  smaller,  relationship: 
1,000  new  jobs  would  cut  AFDC  rolls  by  154  recipients.  What  may 
explain  these  results  is  that  1987  was  still  a  boom  year  for  the 
national  economy,  whereas  1988  and  1989  saw  the  onset  of  recession. 
The  smaller  employment  coefficient  for  1988-89  suggests  that  new 
jobs  have  less  of  an  impact  on  welfare  recipient  numbers  when  a 
recession  is  simultaneously  adding  new  people  to  the  rolls . 

Taken  at  full  strength,  these  robust  estimates  imply  that  the 
start-up  and  success  of  Foxwoods  have  in  all  likelihood  reduced 
noticeably  both  welfare  rolls  and  total  payments  in  Connecticut, 
and  probably  in  Rhode  Island,  too  (see  section  II. C.  above). 
Assuming  the  average  effect  holds  for  all  new  employment  created 
because  of  the  casino's  existence  —  say,  26,000  jobs^'  —  the  total 
eventual  associated  decline  in  AFDC  recipients  ranges  from  4,004  to 
6,760  —  probably  closer  to  the  former  than  the  latter,  unless  the 
weak  performance  of  the  southern  New  England  economy  in  the  early 
1990s  improves  soon.   Assuming  an  average  monthly  benefit  payment 


Maintenance,  but  to  no  avail  in  time  for  use  in  the  present 
analysis. 

"  I.e.,  9,500  directly  at  Foxwoods,  the  further  10,500  or  so 
jobs  in  New  London  County,  and  an  added  6,000  (conservatively 
calculated  at  about  85  percent  of  the  maximum  figure)  for 
associated  job  growth  in  the  rest  of  the  state. 


84-760  0-94-13 


382 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-11- 

per  recipient  of  $200  (probably  low),  the  monthly  savings  would 
range  from  $800,800  to  $1.35  million;  the  yearly  savings  would  run 
from  $9.61  to  $16.20  million. 

We  cannot  be  sure  about  the  distribution  of  these  effects 
among  the  towns  and  cities  in  the  region.  Because  (as  noted  above) 
a  large  part  of  the  direct  hiring  at  Foxwoods  has  occurred  in  the 
New  London-Norwich  LMA,  much  of  the  reduction  in  AFDC  rolls  and 
payments  has  likely  occurred  there.  But  we  have  found  noticeable 
indirect  hiring  effects  in  the  rest  of  Connecticut  and  (by 
inference)  Rhode  Island.  Also,  we  cannot  tell  how  many  casino 
employees  with  local  addresses  have  moved  there  to  work.  We  are 
confident,  though,  that  the  9,500  new  Foxwoods  jobs  will  ultimately 
lessen  substantially  the  welfare  burden  in  both  Connecticut  and 
Rhode  Island. 


III.  HOUSE  PRICES 

Why  would  we  expect  to  find  a  relationship  between  the  success 
of  Foxwoods  and  house  prices  in  the  surrounding  area?  Because  it 
is  a  well  known  economic  result  that  real  estate  prices  generally, 
and  single-family  housing  prices  in  particuleu:,  move  in  the  same 
direction  as  economic  activity.  During  recessions,  when 
unemployment  rises  and  income  growth  slows,  the  demand  for  houses 
declines;  given  the  supply,  prices  fall.  Conversely,  with  the 
lower  unen^loyment  and  rising  incomes  of  a  robust  economy,  the 
demand  for  houses,  and  (with  it)  their  prices,  rise.  One  of  the 
members  of  the  research  team  responsible  for  this  report  has 
contributed  to  the  economics  literature  on  this  subject.^*   We 


*®  John  M.  Clapp  auid  Carmelo  Giaccotto,  "The  Influence  of 
Economic  Variables  on  Local  House  Price  Dynaunics,"  June  1993, 
forthcoming  in  Journal  of  Urban  Economiria.  The  regression  analysis 
in  this  study  used  data  for  Hartford,  Connecticut. 


383 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-12- 

replicated  his  analysis  to  exaimine  the  impact  of  casino  hiring  on 
house  prices  in  the  region  that  surrounds  it.^® 

With  least  squares  regression  techniques  and  quarterly  data, 
we  estimated  the  statistical  relation  between  unemployment  rates 
and  real  house  prices  (after  inflation)  in  the  four  easternmost 
LMAs  in  Connecticut.  The  data  spanned  the  period  1981: IV  (house 
sales  prices)  or  1982:1  (unemployment  rates)  through  1993:1.  In 
keeping  with  previous  studies,  our  hypothesis  was  that  regional 
rather  than  strictly  local  unemployment  rates  would  affect  house 
prices  in  a  given  locale.  Moreover,  we  expected  moves  in  house 
prices  to  lag  changes  in  the  unemployment  rate  by  some  months. 

The  results  bear  out  the  hypotheses:  On  average,  every  1 
percentage  point  decline  in  the  weighted-average  regional  (4-LMA) 
unemployment  rate  is  associated,  9  months  later,  with  a  7.7  percent 
increase  in  real  house  prices.  The  results  also  show  that  the 
impact  on  house  prices  is  greater,  the  smaller  the  initial 
unemployment  rate  from  which  the  1-point  decline  occurs,  and  vice 
versa: 


Initial  Unemoloy- 

Increase  in  Real  House 

ment  Rate 

Prices  Per  1-Point  Decline 

4  % 

10.9  % 

5  % 

8.6  % 

6  % 

6.3  % 

7  % 

4.0  % 

^'  For  the  technical  methodology  and  detailed  calculations  of 
our  regression  analysis  of  the  relation  between  house  prices  and 
changes  in  the  unemployment  rate,  see  the  separate  document,  "The 
Impact  of  a  Change  in  Basic  Employment  within  One  LMA  on  House 
Values  in  the  Same  and  Surrounding  LMA's,"  by  John  M.  Clapp.  See 
footnote  4  above  for  a  listing  of  the  four  LMA's.  The  New  London- 
Norwich  LMA  includes  two  Rhode  Island  towns,  Hopkinton  and 
Westerly,  which  we  exclude.  Note  that  we  had  to  switch  from  New 
London  County  (in  analyzing  employment  impacts)  to  the  four  LMAs 
(in  gauging  effects  on  house  prices)  because  of  the  way  the 
relevant  data  are  reported.  LMA  data  for  New  London-Norwich  were 
too  scant  in  sectoral  detail  to  use  them  in  the  employment-impact 
work;  thus  we  turned  to  county- level  data. 


384 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-13- 

In  other  words,  the  stronger  the  economy,  the  greater  the  boost  in 
house  prices  associated  with  a  1-point  reduction  in  the  regional 
unemployment  rate. 

To  translate  these  results  into  effects  on  house  prices  in  the 
region  surrounding  Foxwoods,  we  must  first  convert  the  employment 
effects  discussed  in  section  I  above  into  changes  in  unemployment 
rates.  The  latter  equals  the  number  unemployed  (not  working  and 
actively  seeking  work),  divided  by  the  labor  force,  which  equals 
the  number  employed  plus  the  number  unemployed.  Doubtless,  some 
casino  hiring  has  directly  reduced  the  ranks  of  the  unemployed, 
hence  also  nearby-LMA  unemployment  rates  (as  the  labor  force  would 
not  have  changed).  Other  Foxwoods  hires,  however,  likely  are  new 
entrants  into  the  labor  force  in  the  4  LMAs;  the  probability  of 
this  is  greater,  the  larger  is  total  employment  at  the  casino. 
Moreover,  many  Foxwoods  workers  hired  locally  create  job  non-casino 
vacancies  that  attract  job-seekers  to  the  area.  Lacking  evidence 
on  the  local /in-migrant  split,  we  assumed  that  75  percent  of  the 
first  tranche  of  2,300  hires  (early  1992)  came  from  those 
unemployed  and  living  in  the  4  LMAs,  while  25  percent  were  new 
labor-force  entrants.  For  the  second  tranche  of  1,900  workers 
(January  1993),  we  assumed  a  split  of  65-35,  and  for  the  third 
tranche  of  3,600  employees  (the  balcuice  of  1993),  30-70. ^^ 

Note  that,  while  new  labor  force  entrants  are  not  included 
directly  in  our  analysis,  their  presence  in  the  4  LMAs  will  give  a 
further  stimulus  to  real  house  prices.  Hence,  our  calculations 
based  just  on  employment  gains  from  existing  labor  force  give 
conservatively  low  estimates  for  increases  in  house  prices. 

Coupling  these  labor  force  assumptions  with  the  regression 
results,  and  further  recalling  that  the  full  indirect  employment 


2°  We  limited  the  total  additional  employment  to  7,800  workers 
in  order  to  keep  the  scenarios  within  the  present  century.  The 
full  effects  of  casino  employees  added  after  1994  will  extend 
beyond  the  year  2000. 


385 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-14- 

gains  discussed  in  section  I  will  occur  gradually  over  a  number  of 
years,  enables  us  to  construct  a  scenario  for  the  impact  of 
Foxwoods '  expansion  on  real  house  prices  in  the  four  LMAs  over  the 
course  of  the  1990s.  We  discuss  first  the  direct  effects  from 
casino  hiring  only,  and  then  the  longer-term  indirect  effects  of 
the  additional  hiring  induced  by  Foxwoods'  growth. 

Within  9  months  of  the  first  2,300  casino  hires  (starting 
January  1992),  real  house  prices  rose  by  an  estimated  2.6  percent, 
or  some  $439  million. ^^  The  second  tranche  of  1,900  employees 
(starting  February  1993)  will  have  added  another  1.9  percent,  or 
$313  million,  to  real  house  prices,  for  a  total  increase  of  $752 
million  by  the  end  of  1993.  Finally,  by  late  1994,  assuming  a 
third  group  of  3,600  new  employees  added  during  1993,  there  should 
be  a  further  boost  in  real  house  prices  of  2.5  percent,  or  $425 
million,  for  a  total  of  $1,177  billion  just  from  Foxwoods'  own 
hiring. 

Under  the  stated  assumptions  about  labor  force  entry  in  the  4 
LMAs,  the  indirect  as  well  as  the  direct  employment  effects  of  the 
casino's  growth  will  steadily  reduce  unemployment  in  the  region. 
As  that  happens,  there  will  be  further  upward  pressures  on  real 
house  prices.  Assuming  total  Foxwoods  employment  were  to  remain  at 
7,800,  by  the  end  of  the  decade  the  estimated  additional  boost  in 
house  prices  would  total  29.1  percent,  or  $4,882  billion. 
Combining  the  indirect  with  the  earlier  direct  effects,  the 
estimated  increase  in  real  house  prices  would  come  to  36.1  percent, 
or  $6,059.  If  casino  hiring  reached  the  full  projected  9,500 
employees  by  early  1994,  it  would  add  another  8  percent,  or  $1,341 
billion,  to  the  totals. 


^'  This  is  gross  upward  pressure  on  house  prices  in  the  region 
from  Foxwoods  hiring,  not  a  prediction  of  actual  house-price 
changes.  The  regression  results  explain  only  some  two-thirds  of 
the  variation  in  real  house  prices.  Other  variables,  assumed 
constant  in  this  discussion,  could  well  have  pushed  house  prices 
downward . 


386 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-15- 


To  put  the  foregoing  figures  in  perspective,  an  18.4  percent 
increase  in  the  real  price  of  a  representative  house  worth  $100,000 
today  would  be  $18,400.  Remember  that  real  prices  are  net  of  price 


inflation. 


IV.   SUMMARY  AND  CONCLUSIONS 

We  have  examined  the  economic  impacts  of  the  rapid  expansion 
of  Foxwoods  High-Stakes  Bingo  &  Casino  since  early  1992,  on  three 
dimensions:  I.  employment;  II.  AFDC  payments;  and  III.  house 
prices.  Our  estimates  provide  strong  evidence  that  those  impacts, 
on  the  state  as  well  as  on  the  immediate  locale  around  the  casino, 
have  been  and  will  continue  to  be  significant. 

I.  Employment  Impacts;  Every  new  Foxwoods  job  will  support  an 
estimated  1.107  additional  local  jobs  in  New  London  County.  The 
resulting  total  gain  in  local  payroll  (casino  plus  non-casino) 
equals  $50,355  per  Foxwood  job.  For  the  full  complement  of  9,500 
casino  employees,  total  additional  local  employment  will  eventually 
come  to  20,017.  The  increase  in  payroll  for  Foxwoods  and  non- 
Foxwoods  workers  combined  will  total  $478.5  million. 

The  employment  and  earnings  gains  in  New  London  County  will 
spur  comparable,  though  smaller,  gains  in  the  rest  of  Connecticut, 
and  in  other  states  as  well.  The  planned  total  of  9,500  Foxwoods 
workers  will  support  up  to  7,030  new  jobs  in  the  other  Connecticut 
counties,  with  added  payroll  (at  the  1990  average  per  job)  of 
$214.4  million.  "Leakages"  to  Rhode  Island  and  other  states  will 
reduce  those  figures  somewhat,  but  the  gains  in  the  other  states 
(especially  Rhode  Island)  will  in  turn  offset  the  leakages  as  their 
residents  buy  goods  and  services  in  Connecticut. 


387 


ECONOMIC  IMPACTS  OF  FOXWOODS  CASINO 
-16- 


II.  AFDC  Payments;  Every  new  job  created  reduces  the  AFDC 
rolls  by  an  estimated  0.154  to  0.260  person.  If  those  estimates 
hold  for  the  total  employment  impact  of  Foxwoods,  statewide,  and 
assuming  an  estimated  total  impact  of  26,000  jobs,  total  AFDC 
recipients  will  decline  by  4,004-6,760  people,  and  total  budgetary 
savings  will  run  $9.61-16.20  million  per  year. 

III.  House  Prices;  Each  decline  of  1  percentage  point  in  the 
unemployment  rate  in  the  4  easternmost  LMAs  in  Connecticut  is 
associated  with  a  7.7  percent  increase  in  real  house  prices,  on 
average.  Translating  the  employment  impacts  of  Foxwoods  into 
reductions  in  LMA  unemployment  rates,  under  plausible  labor  force 
assumptions,  and  taking  into  account  the  short-  and  longer-term 
adjustment  lags,  we  estimate  that  the  existence  of  the  casino  will 
have  increased  real  house  prices  in  the  4  LMAs  by  some  $1,177 
billion  by  the  end  of  1994,  just  from  casino  hiring  alone. 
Incorporating  the  indirect  employment  effects,  assumed  to  occur 
gradually  over  the  rest  of  the  decade,  the  total  increase  in  real 
house  prices  will  amount  to  fully  $6,059  billion. 


388 


THE  IMPACT  OF  A  CHANGE  IN  BASIC  EMPLOYMENT  WITHIN  ONE 
LMA  ON  HOUSE  VALUES  IN  THE  SAME  AND  SURROUNDING  LMA'S 


by  John  M.  Clapp 
September  24,  1993 

What  is  the  impact  of  a  change  in  basic  employment  in  one  local  area  on  house  values 
in  the  same  and  surrounding  areas?  Suppose  that  we  start  with  the  New  London-Norwich  labor 
market  area  (LMA),  and  that  basic  employment  is  added  to  that  area.  This  causes  a  larger 
change  in  total  employment  because  basic  employees  spend  money  on  local  goods  and  services. 
If  unemployment  is  above  normal,  as  it  was  in  1992-93,  then  the  additional  total  employment 
should  come  largely  from  a  reduction  in  unemployment.  Alternately,  discouraged  workers 
should  come  back  into  the  labor  force;  this  has  a  similar  effect  in  terms  of  increasing  the 
employment  of  the  local  population. 

According  to  the  research  of  Clapp  and  Giaccotto  (forthcoming.  Journal  of  Urban 
Economics,  1993)  a  reduction  in  unemployment  will  cause  an  increase  in  real  house  prices.' 
For  each  1%  decrease  in  unemployment,  the  increase  in  house  prices  should  range  from  2%  to 
about  8%,  with  higher  increases  in  communities  with  greater  housing  wealth  and  lower  increases 
in  communities  with  more  modest  housing.  The  Clapp  and  Giaccotto  research  shows  that  it  is 
possible  to  measure  point  elasticities:  that  is,  a  1%  change  in  unemployment  is  associated  with, 
for  example,  a  3%  change  in  the  value  of  a  typical  house  in  the  opposite  direction.  Once  this 
elasticity  has  been  determined,  it  can  be  used  to  find  the  aggregate  change  in  house  values  in  the 
local  area. 


'Unemployment  is  reduced  by  the  change  in  lolal  nnploymrat.  not  just  the  change  in  basic  employment.  CUpp  and 
Giaccouo  found  that  any  change  in  unemployment,  even  one  from  the  hiring  of  nonbasic  employees,  caused  a  change  in  real 
house  prices. 


389 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  2 

It  is  plausible  that  the  Clapp  and  Giaccotto  approach  can  be  extended  to  find  changes  in 
house  values  in  surrounding  LMA's.  This  would  require  running  regressions  with  percent 
change  in  real  price  as  a  dependant  variable  and  percentage  unemployment  in  neighboring 
LMA's  as  explanatory  variables.  Lagged  values  of  unemployment  might  be  included  in  this 
regression.  Again,  the  elasticities  found  for  neighboring  areas  could  be  used  to  find  the 
aggregate  change  in  house  values  resulting  from  an  increase  in  basic  employment. 

Details  of  the  Methodology  for  Finding  Aggregate  Value  Changes 

Aggregate  assessed  value  for  single  family  residential  property  within  the  LMA  can  be 
used  to  find  the  effect  of  a  change  in  unemployment  on  aggregate  house  values  and  on  aggregate 
tax  revenues.  In  order  to  do  this,  it  is  necessary  to  have  the  aggregate  assessed  value  as  of  a 
given  point  in  time  (e.g.,  October  1,  1992)  within  the  LMA.  We  would  then  use  the 
transactions  data  from  0PM  to  fmd  the  average  ratio  of  sales  price  to  assessed  value  around  this 
same  time  period.  This  average  ratio  would  then  be  used  to  fmd  total  property  value  within  the 
LMA.  The  elasticity  calculated  above  together  with  the  expected  change  in  unemployment 
would  be  used  to  calculate  the  effect  of  the  change  of  unemployment  on  aggregate  single  family 
residential  property  values.  Note  that  this  methodology  underestimates  the  effect  of  the  change 
in  unemployment  because  the  effect  on  multi-family  properties  and  commercial  properties  has 
not  been  included. 

The  data  needed  to  implement  this  can  be  summarized  as  follows: 

1 .  Expected  (or  historical)  change  in  basic  employment; 

2.  The  economic  base  multiplier; 


390 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  3 

3.  The  labor  force  and  unemployment  in  the  LMA; 

4.  Indices  of  house  prices  in  each  LMA; 

5.  The  elasticity  of  house  prices  with  unemployment,  estimated  by  regression 
analysis; 

6.  Aggregate  assessed  value  for  SFR  property  within  the  LMA; 

7.  The  ratio  of  SFR  sales  prices  to  assessed  value. 

Items  3-6  would  be  needed  for  neighboring  LMA's  if  estimates  of  spillover  effects  were 

required. 

p^timating  the  Elasticity  of  Change  in  House  Prices  with  Respect  to  Change  in  Unemplovment 

Regression  analysis  was  used  to  estimate  the  percent  change  in  real  house  prices  with 
respect  to  a  1%  change  in  the  unemployment  rate.  An  attempt  was  made  to  estimate  two 
elasticities  of  this  type:  one  with  respect  to  a  1  %  change  in  unemployment  in  the  same  LMA  and 
second  with  respect  to  a  1  %  change  in  unemployment  in  a  neighboring  LMA. 

To  begin  this  process,  we  collected  data  on  quarterly  unemployment  rates  by  town  from 
the  beginning  of  1982  through  the  first  quarter  of  1993.  This  was  done  for  each  town  within 
four  LMAs  (see  M^  1): 

Danielson 

Lower  River 

New  London/Norwich 

Willimantic 
The  unemployment  data  are  graphed  as  Figure  1  and  Figure  2. 

The  graph  tells  us  that  the  unemployment  rates  in  the  four  LMA's  generally  moved 


391 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  4 

together,  even  though  the  levels  are  somewhat  different.  Thus,  the  whole  region  was  clearly 
influenced  by  very  similar  economic  conditions  over  this  time  period.  This  suggests  that  it  will 
be  difficult  or  impossible  to  disentangle  the  effects  of  unemployment  change  in  neighboring  areas 
from  unemployment  change  in  the  same  area  as  the  real  price  change. 

Indices  of  the  value  of  a  typical  house  in  each  LMA  have  been  developed  by  the  author 
(see  Figure  3).  These  numbers  measure  the  value  of  a  typical,  unchanged  house  in  each  area. 
The  dollar  values  are  an  estimate  of  the  most  likely  sales  price  obtained  from  repeatedly  selling 
this  unchanged  house  each  quarter  from  the  fourth  quarter  of  1981  through  the  first 
quarter  of  1993. 

Since  the  population  and  income  characteristics  of  each  area  differ,  the  typical  house 
differs.  For  example,  the  typical  house  in  the  Lower  River  area  is  a  better  quality,  on  a  better 
location,  than  the  typical  house  in  each  of  the  other  three  area  (Figure  3).  New 
London/Norwich  has  a  typical  house  in  the  middle  of  the  value  range  whereas  Danielson  is  at 
the  low  end. 

The  movements  of  house  prices  are  somewhat  diffesent  in  the  four  LMAs.  Lower  River 
has  had  essentially  constant  house  prices  since  the  end  of  1987  whereas  the  other  areas 
experienced  some  decline,  at  least  through  the  fourth  quarter  of  1992.  The  New 
London/Norwich  LMA  has  been  more  negatively  impacted  over  the  last  two  years,  probably  by 
a  decline  in  defense-related  employment. 

The  constant  quality  price  indices  are  deflated  by  the  Consumer  Price  Index  (CPI)  in 
order  to  find  real  house  prices.  We  do  this  because  we  expect  unemployment  to  have  an 
influence  on  real  house  prices,  not  on  the  rate  of  inflation. 


392 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  5 

Finally,  we  take  percentage  change  in  real  house  prices.  The  percentage  change 
transformation  is  used  because  we  are  trying  to  find  an  elasticity  between  house  price  change 
and  change  in  unemployment. 

The  four  LMAs  considered  here  define  a  region  with  the  New  London/Norwich  LMA 
as  its  core.  This  research  focuses  on  the  change  in  basic  employment  within  the  New 
London/Norwich  LMA.  Since  this  is  the  core,  we  define  the  three  other  LMAs  as  the  peripheral 
regions.  We  are  interested  in  the  impact  of  the  change  in  unemployment  within  New 
London/Norwich  on  each  of  the  three  neighboring  areas  (see  the  arrows  on  Mi^)  2).  Therefore, 
New  London/Norwich  is  defined  as  the  appropriate  neighboring  area  for  each  of  the  other  three. 
For  New  London/Norwich  itself,  the  appropriate  concept  of  neighboring  area  is 
an  average  of  the  other  three  areas.  That  is,  we  would  like  to  know  the  impact  of  a  change  in 
unemployment  within  the  entire  peripheral  region  on  the  core  area  (New  London/Norwich). 
When  we  average  unemployment  in  these  three  areas,  we  weight  the  unemployment  in  each  area 
by  the  total  labor  force  within  the  area.  This  gives  lower  weight  to  the  Lower  River  area  and 
higher  weight  to  Willimantic  and  Danielson. 

In  order  to  implement  the  model  efficiently,  we  stack  the  data.    That  is,  we  take  the 
quarterly  data  for  Danielson  and  put  it  at  the  top  of  the  stack;  under  those  data  we  put  all  of  the 
quarterly  data  for  Lower  River  and  so  for  the  four  LMAs. 
Results  of  the  Repression  Analysis 

When  unemployment  in  the  same  LMA  ("own  unemployment")  is  the  only  explanatory 
variable,  then  the  estimated  elasticity  is  between  -3  and  -4  (Table  1.  regressions  1  and  2).  This 
means  that  an  increase  in  unemployment  of  1  %  will  cause  a  decrease  in  real  house  prices  of 


393 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  6 

between  3  and  4%.  The  higher  elasticity  (-4)  is  associated  with  a  3  quarter  (9  month)  lag  on 
unemployment,  and  this  lag  increases  the  R^  significantly.  A  three  quarter  lag  is  plausible 
because  it  takes  time  for  an  increase  in  unemployment  to  have  an  effect  on  purchases  of  houses. 
Since  a  number  of  tests  revealed  that  the  three  quarter  lag  is  best,  we  retain  that  for  the  rest  of 
this  research. 

When  neighboring  unemployment  is  added  to  own  unemployment  in  regressions  3-S  of 
Table  1,  the  neighboring  unemployment  has  an  elasticity  of  between  -6.9  and  -7.4.  Also,  the 
addition  of  neighboring  unemployment  nearly  doubles  the  R'  to  the  vicinity  of  .65. 

The  most  surprising  result  is  that  the  own  unemployment  elasticity  is  small  and  not 
statistically  significant  when  the  neighboring  unemployment  is  included  in  the  regression!  The 
most  likely  explanation  of  this  is  the  similarity  of  movement  among  all  of  the  unemployment 
variables  (Figure  1).  Since  neighboring  unemployment  is  typically  for  much  larger  geographical 
areas  (See  Map  2  and  discussion  in  text)  it  dominates  own  unemployment. 

Since  New  London/Norwich  is  the  center  of  the  region,  we  hypothesize  that  this  elasticity 
might  be  different  than  those  for  the  three  peripheral  LMAs.    Regressions  4  and  5  test  this 
possibility  with  negative  results. 
The  Impact  of  Unemployment  in  the  Entire  Region 

The  five  regressions  presented  so  far  (Table  1)  are  unable  to  distinguish  between  the 
impact  of  unemployment  in  the  own  LMA  and  unemployment  in  neighboring  LMAs.  Therefore, 
we  did  the  analysis  with  unemployment  in  the  entire  metropolitan  area  as  an  explanatory 


394 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  7 

variable.'  The  result,  regression  6  in  Table  1,  indicates  an  elasticity  of  -7,7, 

It  is  possible  that  unemployment  has  a  nonlinear  effect  on  percent  change  in  house  prices. 
It  is  reasonable  to  expect  that  a  reduction  in  unemployment  has  less  effect  at  high  levels  of 
unemployment  than  it  does  at  low  levels  of  unemployment.  This  is  because  some  reduction  in 
unemployment  when  the  economy  is  very  slack  will  have  little  effect  on  the  demand  for  housing. 
But,  when  unemployment  is  low,  demand  for  housing  is  pushing  against  a  limited  supply  and 
prices  will  rise  rapidly,  after  a  9  month  lag. 

We  tested  this  idea  by  including  unemployment  squared  in  regression  #  7  in  Table  I. 
The  positive  sign  on  squared  unemployment  conforms  to  our  expectation  that  the  effect  of 
unemployment  on  house  price  change  is  greater  when  the  unemployment  rates  are  low. 
Regression  #  7  predicts  the  following  elasticities  of  house  prices  with  respect  to  unemployment: 


Unemployment 

Rate 

Elasticity 

.03 

-13.2 

.04 

-10.9 

.05 

-8.6 

.06 

-6.3 

.07 

-4.0 

These  elasticities  are  the  ones  used  to  estimate  the  effect  of  the  change  in  basic 
employment  on  house  prices  in  the  four  labor  market  areas  considered  here.    By  measuring  total 


'Because  of  the  way  that  Ihe  daU  were  collected  for  the  study  this  variable  is  the  weighted  average  of  the  four  unemployment 
rates  in  each  quarter  The  weighting  factor  is  the  labor  force  in  each  area  ui  1990.  This  unemployment  series  ii  an 
approximation  to  the  rate  of  unemployment  that  would  be  aiuined  if  unemployed  persons  were  added  up  for  the  four  LMAi  and 
divided  by  the  sum  of  the  labor  force  in  the  four  LMA's. 


395 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  8 

house  value  in  the  four  areas,  we  can  estimate  the  aggregate  dollar  change  in  house  value  due 
to  any  change  in  basic  employment. 

Our  conclusion  from  this  research  is  that  the  average  elasticity  of  real  house  price  change 
with  respect  to  unemployment  in  the  region  is  -7.7  over  the  time  period  firom  1982-1993.' 
This  elasticity  is  higher  when  unemployment  is  low  (e.g.,  3%)  than  when  it  is  high  (e.g.,  7%). 
The  elasticity  of  real  house  price  change  with  respect  to  unemployment  in  one's  own  area  is 
approximately  zero. 
The  Impact  of  Unemployment  on  Aggregate  House  Values  in  the  Entire  Region 

Our  main  finding  from  the  previous  section  is  that  a  change  in  unemployment  in  the 
region  defmed  by  the  four  LMAs  has  a  roughly  the  same  effect  on  each  of  the  LMAs  within  the 
region.  This  effect  is  measured  by  the  elasticities  based  on  regression  7,  Table  1  (see  discussion 
above).  Since  the  effect  is  the  same  for  all  LMAs  in  the  region,  it  is  a  simple  matter  to  measure 
the  impact  of  a  reduction  in  unemployment  in  the  broad  region  on  house  values  in  the  region. 

To  implement  this  idea,  we  calculated  the  following: 

1.  Aggregate  residential  property  values  in  the  entire  region  as  of  April  1,  1991. 
This  information  came  from  the  Equalized  Net  Grand  List  (ENGL)  computed  by 
the  Office  of  Policy  and  Management. 

2.  The  change  in  unemployment  caused  by  a  change  in  basic  employment.  This  is 
the  basic  employment  change  multiplied  by  the  economic  base  multiplier  and 
divided  by  the  labor  force  in  the  region  as  of  the  second  quarter,  1992. 


^is  conclusion  is  undoubtedly  specialized  for  the  region  being  considered  here     The  dominant  position  of  the  New 
London/Norwich  LMA  gives  a  very  special  inlcri-irctalion  to  the  concept  of  neighboring  unemployment. 


396 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  9 

3.  Multiply  the  result  from  Step  2  by  the  elasticities  calculated  in  the  previous 
section/  This  gives  the  percentage  change  in  house  values  expected  because  of 
the  new  basic  employment. 

4.  Multiply  the  percentages  in  step  3  by  the  aggregate  house  value  in  step  1  to  obtain 
the  aggregate  change  in  house  value  in  the  region  because  of  the  change  in  basic 
employment. 

When  these  steps  were  implemented  with  the  data  for  the  four  LMAs,  we  found  a  change  in 
aggregate  value  of  $1.8  B  (+10.8%  for  the  typical  house)  over  a  5  year  period,  from  the 
February  1992  hiring  of  2,300  employees.  The  January,  1993  hiring  of  an  additional  1,900 
employees  produces  an  additional  $4. 1  B  change  in  house  values  (+6.8%  for  the  typical  house). 
Finally,  the  hiring  of  an  addition  5,200  employees  by  January,  1994  is  estimated  to  produce  an 
additional  $4.4  B  in  house  value  (+26.4%  for  the  typical  house)  within  5  years  (by  1999). 

The  grand  total  from  hiring  9,400  employees  is  expected  to  be  an  increase  of  $7.4  B  in 
house  value  (47.5%  increase  in  the  typical  house).  This  scenario,  which  assumes  no  other 
changes  in  the  economy  (e.g.,  no  major  changes  at  electric  boat),  should  be  fully  realized  by 
1999. 


*Since  ihe  elasticity  varies  with  the  unemployment  rale,  steps  2  and  3  are  done  for  each  1  %  change  in  unemployment  caused 
by  the  basic  employment  change 


397 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  10 

m.  HOUSE  PRICES 

A  relationship  between  percent  change  in  house  prices  and  the  rate  of  unemployment 
(unemployed  persons  divided  by  the  labor  force)  was  used  to  determine  the  effects  of  an  increase 
in  basic  employment  on  house  prices.  It  is  reasonable  to  expect  that  economic  recessions  will 
cause  unemployment  to  rise  and  to  remain  at  a  high  levd;  this  reduces  the  demand  for  housing 
and  causes  house  prices  to  decrease.  Conversely,  a  robust  economy  Miill  cause  the 
unemployment  rate  to  decline  to  low  levels,  exerting  upward  pressure  on  house  prices. 
Therefore,  we  use  regression  analysis  to  find  the  percent  change  in  house  prices  for  every  1  % 
in  the  unemployment  rate.  This  approach  has  been  tested  in  the  academic  literature. 

Seventy-five  percent  of  the  direct  plus  indirect  employment  effects  are  assumed  to  come 
from  the  unemployed  in  the  four  labor  market  areas  combined.*  Twenty-five  percent  of  the 
new  employment  is  assumed  to  come  from  new  entrants  into  the  labor  force:  for  example, 
discouraged  workers  or  those  hired  from  outside  the  four  LMA's.  We  then  divide  the  change 
in  unemployment  by  the  labor  force  to  find  the  effect  of  new  employment  on  unemployment  in 
the  area. 

In  the  current  version  of  the  model,  twenty-five  percent  of  the  employees  that  come  from 
new  entrants  into  the  labor  market  have  no  impact  on  house  prices.  In  reality,  they  undoubtedly 
would  bid  for  housing  and  cause  house  prices  to  increase.  Thus,  our  model  produces  a 
conservative  (low)  estimate  of  the  impact  of  new  employment  on  house  prices. 

Our  regressions  show  that  it  takes  at  least  9  months  for  a  change  in  the  unemployment 


'The  hypothesis  is  (hat  the  impact  of  unemployment  on  house  prices  in  (he  New  London-Norwich  LMA  will  depend  on 
regional  unemployment,  not  just  local     This  hypothesis  holds  up  well  in  the  four  adjoining  LMAs. 


398 


BASIC  EMPLOYMENT  AND  HOUSE  VALUES  11 

rate  to  have  an  impact  on  house  price  changes.  In  addition,  it  takes  time  for  a  change  in  basic 
employment  to  cause  changes  in  nonbasic  employment.  This  time  lag  can  be  substantial  because 
restaurants,  retailers  and  other  nonbasic  employers  respond  slowly  to  new  business  opportunities 
in  the  area.  Therefore,  we  estimate  that  it  takes  one  to  five  years  for  the  effects  of  new  basic 
employment  on  house  prices  to  be  fiilly  realized. 

Our  estimates  of  the  impact  on  house  prices  are  quite  large. 


399 


400 


Map  2 


RELATIONSHIP  AMONG  THE 
FOUR  LABOR  MARKET  AREAS 
OF  EASTERN  CONNECTICUT 


The  New  London/Norwich  LMA  is  the 
core  employment  market  influencing 
each  of  the  surrounding  LMA's  (radial 
arrows).    New  London/Norwich  is 
influenced       in  turn  by  the  ring  of 
three  surrounding  LMA's  (dashed  ring 
and  arrows).   The  influence  of  the 
ring  LMA's  is  measured  by  the  weighted 
(by  resident  labor  force)  average 
unemployment  rate  in  the  three  LMA's. 


401 


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406 


Economic  Base  Analysis  for  New  London  County 

Jon  Vilasuso 

September  6,  1993 

Sunnary 

This  study  exeunines  the  employment  and  income  effects  of  creating 
one  additional  job  at  Foxwoods  High  Stakes  Bingo  &  Casino. 
Specifically,  we  address  the  following  set  of  questions. 

1.  Bow  many  additional  jobs,  not  including  the  one  job  at  Foxwoods 
High  Stakes  Bingo  &  Casino,  will  be  created  in  New  London  County? 

2.  What  additional  annual  income  is  realized  in  New  London  County 
as  a  result? 

3.  Will  the  rest  of  Connecticut  (not  including  New  London  County) 
also  experience  job  growth  as  a  result  of  generating  an  additional 
job  at  Foxwoods  High  Stakes  Bingo  &  Casino? 

4.  What  additional  annual  income  is  realized  in  the  rest  of 
Connecticut  if  job  growth  is  present? 

Each  question  is  addressed  in  turn. 

1 .  Employment  Effects  in  New  London  County  Using  employment  data 
from  the  1990  County  Business  Patterns  and  the  1987  Census  of 
Governments,  we  find  that  the  creation  of  one  job  at  Foxwoods  High 
Stakes  Bingo  &  Casino  supports  an  additional  1.23  jobs  in  New 
London  County.  For  each  new  job  created  at  the  casino.  New  London 
County  realizes  a  total  increase  in  employment  of  2.23  jobs 
inclusive.' 


'  This  assumes  that  the  additional  job  created  at  the  casino 
serves  customers  outside  New  London  County.  In  this  case,  this 
assumption  appears  reasonable  because  this  new  job  is  placed 
under  70  SIC,  which  for  New  London  County,  is  primarily  directed 
at  nonlocal  consumption  needs. 


407 


2.  Income  Effects  in  New  London  County  Osing  payroll  data  from  the 
County  Business  Patterns  and  the  1987  Census  of  Governments,  we 
find  that  the  additional  1.23  jobs  in  New  London  County  generates 
an  annual  income  of  $25,482  in  1990  dollars.  In  other  words,  the 
addition  of  one  position  at  Foxwoods  creates  additional  income  of 
$25,482  per  year  in  1990  dollars  for  New  London  County  beyond  the 
annual  income  of  the  casino  employee.^ 

3.  Employment  Effects  in  Connecticut  Excluding  New  London  County  As 
a  result  of  adding  one  additional  eo^loyee  to  Foxwoods,  the  state 
of  Connecticut,  excluding  New  London  County,  realizes  a  gain  in 
employment  of  0.74  new  jobs. 

4.  Income  Effects  in  Connecticut  Excluding  New  London  County  The 
0.74  new  jobs  in  Connecticut,  excluding  New  London  County, 
generates  annual  income  of  $20,415  measured  in  1990  dollars.  This 
figure  does  not  include  income  changes  in  New  London  County. 

Methodology 

In  this  part,  the  methodology  employed  is  described.  Each  question 
in  examined  in  turn. 

1.  Employment  Effects  in  New  London  County  Economic  base  analysis 
is  used  to  address  the  question:  what  are  the  total  employment 
effects  of  creating  an  additional  job  in  New  London  County?  To 
determine  the  total  employment  effects,  we  must  first  distinguish 
between  employment  that  serves  the  consumption  needs  of  the  local 
economy — nonbasic  employment — and  employment  that  produces  goods 
and  services  for  nonlocal  use — basic  employment.  If  a  basic  job  is 
newly  created,  then  the  total  employment  effects  exceeds  the  one 


^  This  works  out  to  an  annual  income  of  $20,717  per  worker 
in  1990  dollars  for  New  London  county.  This  is  above  average  when 
compared  to  the  average  income  of  all  U.S.  workers;  the  Economic 
Indicators  reports  an  average  annual  (52  weeks)  gross  income  of 
$17,958  in  1990  dollars  for  all  U.S.  workers. 


408 


job  because  this  new  basic  job  supports  additional  jobs  in  the 
local  economy's  nonbasic  sector.  The  total  employment  effect  is 
then  the  sum  of  the  one  basic  job  and  the  additional  nonbasic  jobs 
that  are  created  as  a  result. 

Total  employment  effects  of  expanding  operations  at  Foxvoods 
High  Stakes  Bingo  &  Casino  are  determined  by  an  average 
requirements  approach.  Under  the  average  requirements  approach,  the 
average  of  employment  per  capita  in  each  industry  is  used  to 
determine  the  number  of  jobs  that  are  needed  to  service  local 
consumption.  Basic  and  nonbasic  employment  for  New  London  County 
are  then  identified  by  comparing  New  London  County  per  capita 
employment  with  the  average  of  per  capita  employment  in  all 
Connecticut  counties  excluding  New  London  county  for  each 
industrial  classification  reported.  That  is,  if  New  London  County 
has  a  high  level  of  employment  in  a  given  industry  compared  with 
the  average  of  Connecticut's  remaining  counties,  then  part  of  New 
London  County's  employment  in  this  industry  must  service  nonlocal 
needs  as  well  as  satisfying  the  needs  of  local  consumers.  On  the 
other  hand,  should  New  London  County  have  less  than  its  sheure  of 
employment,  then  local  production  is  directed  primarily  at  local 
needs . 

The  comparison  between  local  per  capita  employment  and  average 
per  capita  employment  is  done  for  both  private  employment  and 
public  employment.  Private  employment  encompasses  101  two  or  three 
digit  industry  classification.  Although  disaggregation  to  the  three 
digit  level  is  preferable,  this  is  not  always  possible  because 
employment  figures  are  not  reported  if  a  particular  industry 
includes  only  a  small  number  of  firms,  which  is  the  case  for 
Electric  Boat.  For  this  reason,  manufacturing  employment  is 
reported  as  an  aggregate  figure.  Public  employment  includes  11 
categories  such  as  teachers  at  public  schools  and  parks  and 
recreation  employees. 

Three  points  deserve  further  mention.  First,  armed  services 
employment  is  excluded.  We  have  not  included  military  personnel 
because  it  seems  inappropriate  to  assume  that  military  employment 


409 


in  Connecticut  serves  Connecticut  residents  alone.  It  would  be  more 
appropriate  to  include  military  personnel  if  the  benchmark  econoiey 
were  the  United  States  rather  that  the  state  of  Connecticut. 
Second,  the  counties  used  to  compute  average  requirements  do  not 
include  counties  that  fail  to  report  a  particular  industry  or 
report  only  a  range  of  employment.  In  such  cases,  employment  may  be 
zero  or  an  industry  may  have  only  one  main  employer.  Rather  than 
assume  zero  employment  or  use  some  median  value  of  the  range,  we 
chose  to  exclude  these  entries  when  conqputing  average  requirements. 
Third,  this  study  uses  per  capita  enployment  rather  than  employment 
relative  to  total  employment  in  the  local  economy.  The  use  of  per 
capita  figures  does  not  assume  that  the  demographic  qualities  of 
Connecticut's  counties  are  uniform,  and  per  capita  data  better 
portray  local  consumption  needs. 

More  formally,  total  employment  in  a  local  economy  j,  B^,  is 
the  sum  of  total  basic  employment,  B^,  and  total  nonbasic 
employment,  N^;  or  Bj=Bj*lfj  .^  The  ratio  of  nonbasic  to  basic 
employment  in  economy  j,  kj-Nj/Bj,  measures  the  number  of  additional 
local  jobs  supported  as  a  result  of  creating  one  new  basic  job. 
Thus,  the  total  employment  effect,  including  the  basic  job,  is  just 
Jtj+1 .  The  ratio  kj  is  calculated  by  determining  the  fraction  of 
local  employment  needed  to  support  local  consumption,  and  the 
remaining  (if  any)  that  serves  nonlocal  needs. 

To  determine  k^,  we  begin  by  measuring  total  employment  in 
industry  i=l,...,n  for  County  j«l,...,m  denoted  E^^j.  Per  capita 
employment  in  industry  i  is  e^^^'B^^j/Pj  where  Pj  is  the  population 
of  County  j.  Next,  the  average  per  capita  employment  for  all 
counties  excluding  county  j  in  industry  i,  fi^ ,  is  computed  by 

^.'^ge,,,  (1) 

This  average  per  capita  employment  figure  measures  the  per  capita 


^  A  list  of  all  variables  used  in  this  study  is  shown  on  the 
last  page. 


410 


employment      needs      to      service      local      consumption      needs.      This 
calculation   is  done  for  all  industries. 

Comparing  Cij  and  6^  determines  whether  employment  in  industry 
i  for  County  j  exceeds  employment  needed  to  serve  local 
consumption.  That  is,  if  e^,^>5j  then  piu:^  of  total  local  employment 
in  industry  i  meets  nonlocal  demand  as  well  as  local  demand.  More 
formally,  if  ei,j>6i  then  nonbasic  employment  in  industry  i  is 
D^^j'iSi)  (Pj)  ,  otherwise  nj^-K^^j  in  which  case  only  local  needs  are 
met.  Simileurly,  basic  employment  in  industry  i  is  bi^j'S^^j-a^jif 
positive,   otherwise  b^j'O.   Finally,   kj  is  given  by  the  expression 


(2) 


For  New  London  County,  kj=l.23. 

2.  Income  Effects  in  New  London  County  The  total  income  effects 
realized  in  New  London  County  include  the  one  job  created  at 
Foxwoods  High  Stakes  Bingo  &  Casino  plus  the  annual  incomes  of  the 
1.23  additional  workers.  The  annual  salaries  of  the  1.23  workers  is 
of  primary  interest  here. 

To  compute  this  income,  we  begin  by  calculating  the  annual 
income  per  worker*  in  industry  i  for  New  London  County,  b^j.  The 
annual  income  per  worker  in  each  industry  is  weighted  by  the 
percentage  of  nonbasic  employment  in  that  industry  relative  to 
total  nonbasic  employment.  This  weighing  scheme  uses  only  nonbasic 
because  the  1.23  new  job  are  nonbasic,  and  serve  only  the  one  new 
(basic)  job  created  at  the  casino.  The  annual  income  attributed  to 


*   Income  figures  include  salaries,  wages,  commissions, 
bonuses,  vacation  allowances,  and  the  values  of  payments  in  kind 
(e.g.  free  food).  Also  included  are  tips  and  gratuities.  Finally, 
income  data  is  before  social  security,  income  tax,  etc.  Note  that 
this  definition  coincides  with  that  used  by  the  IRS  on  Form  941. 


411 


the  creation  of  kj   nonbasic  jobs  is  then  given  by 

*^5^  (3, 

In  the  case  of  New  London  County,  the  income  effect,  excluding  the 
new  job  at  Foxwoods  High  Stakes  Bingo  &  Casino,  is  $25,482  annually 
in  1990  dollars. 

3.  Employment  Effects  in  Connecticut  Excluding  New  London  County  By 
creating  jobs  in  New  London  County,  the  rest  of  the  state  of 
Connecticut  also  realizes  gains  in  eiif>loyiiient  due  to  the  linkages 
between  New  London  County  and  the  rest  of  the  state.  The  first  step 
in  deteinnining  the  effects  generated  in  Connecticut,  excluding  New 
London  County,  involves  calculating  iiiq>orts  for  New  London  County 
that  arise  from  the  creation  of  2.23  new  jobs.  He  assume  that  the 
imports  needs  of  New  London  County  eure  met  by  the  rest  of  the  state 
of  Connecticut.  The  amount  of  new  employment  in  the  rest  of  the 
state  needed  to  meet  the  consumption  needs  of  the  new  2.23  workers 
in  New  London  County  is  given  by  the  expression 

a 
'^  x2.23-(0.121) (2.23)-0.27  ' 


which  states  that  0.27  basic  jobs  in  Connecticut,  excluding  New 
London  County,  are  newly  created  as  a  result  of  adding  one  job  at 
Foxwoods  High  Stakes  Bingo  &  Casino  (which,  in  total,  creates  2.23 
new  jobs  in  New  London  County).  The  intuition  behind  expression  (4) 
is  that  where  local  per  capita  employinent  is  not  sufficient  to 
meet  the  needs  of  the  local  economy,  this  enployaent  must  be 
imported  (we  have  assumed  that  this  iiq>orted  en^loyment  comes  from 
the  rest  of  the  state  of  Connecticut).  Thus,  equation  (4)  measures 
inserted  employment  to  New  London  County  that  arises  as  the  result 
of  creating  a  total  of  2.23  new  jobs  in  the  local  economy.  This 
then  corresponds  to  new  (basic)  jobs  created  in  Connecticut, 
excluding  New  London  County,  attributed  to  changes  in  employment 
levels  in  the  local  economy  (New  London  County). 


412 


The  second  step  involves  computing  the  nonbasic  to  basic  ratio 
for  the  rest  of  Connecticut,  Jc, .  Let  S^^j  denotes  the  requireaent 
that  determines  basic  employment  in  industry  i,  that  is  d^^jddj,  e^^y . 
In  other  words,  Stj  represents  the  employment  factor  that 
calculates  basic  employment  in  county  j,  and  assumes  a  value  of 
employment  per  capita  in  county  j  or  average  employment  per  capita. 
To  begin  the  second  step,  we  note  that  the  nonbasic  to  basic  ratio 
for  Hew  London  County,  equation  (2),  can  be  rewritten  as 

k,.^rp^^^-i.^i—x  (5) 

Solving  expression  (5)  for  ^^i.j  yields 

If  we  isolate  New  London  County  emd  the  rest  of  Connecticut  as  the 
primary  economies  of  concern,  then  the  nonbasic  to  basic  ratio  for 
the  rest  of  Connecticut  is 

where  p,  and  E^are  the  population  and  total  employment  in 
Connecticut  excluding  New  London  County,  respectively.  Expression 
(7)  is  just  the  counterpart  to  expression  (5)  for  the  rest  of 
Connecticut  once  we  model  New  London  County  and  the  rest  of 
Connecticut  as  interdependent  economies.  Alternatively,  the  ratio 
of  nonbasic  to  basic  employment  for  the  rest  of  Connecticut  can  be 
derived  by  treating  the  rest  of  Connecticut  as  the  local  economy 
and  New  London  County  as  the  benchmark  economy.  Substituting  (6) 
into  (7)  yields  the  nonbasic  to  basic  ratio  for  the  rest  of 
Connecticut,  that  is, 

^  _Pj(JCj*l)g,,_  (254,957)  (1.23-*-!)  (1,387,345)  _,  .,  ^g       ,«, 
'    p^j  (3,032,159)  (94,678)  ^  ' 

The  final  step  calculates  the  total  employment  effects  in  the 

rest  of  Connecticut, 

AJ5;r«AB,(l+ic,)-(0.27)  (1+1.75)  =0.74 


413 


As  a  result  of  creating  an  additional  job  at  Foxwoods  High  Stakes 
Bingo  &  Casino,  the  rest  of  the  state  of  Connecticut  enjoys  an 
increase  of  0.74  jobs.* 

4.  Income  Bffects  in  Connecticut  Excluding  New  London  County  The 
income  effect  for  the  rest  of  the  state  is  determined  by  first 
calculating  the  average  private  annual  income  for  Connecticut 
excluding  hew  London  County,  and  then  multiplying  this  figure  by 
the  0.74  jobs.*  In  1990  dollars,  we  find  that  Connecticut, 
excluding  New  London  County,  realizes  an  increase  in  annual  income 
of  $20,415. 


*  Assuming  that  all  imported  employment  to  New  London  County 
comes  from  the  rest  of  Connecticut,  appears  at  first  glance  to 
arrive  at  an  overly  optimistic  estimate  of  employment  growth  in 
the  rest  of  the  state.  This  estimate,  however,  may  not  overstate 
employment  growth  in  the  rest  of  Connecticut.  If,  say,  Rhode 
Island  provides  the  extra  employment  needs  of  New  London  County 
then  the  state  of  Connecticut  may  still  experience  job  growth. 
Even  if  labor  is  imported  from  Rhode  Island,  if  Rhode  Island  in 
turn  imports  Icibor  from  Connecticut,  then  Connecticut  may 
experience  a  comparable  eunount  of  job  growth  in  any  case. 

*  The  average  private  annual  income  calculation  is  from  the 
1990  County  Business  Patterns. 


84-760  0-94-14 


414 


Varlabl*  List 


£j«  total  employment  in  county  j 

£'^  j»»  en^loyment  in  industry  i  for  county  j,  where  Bj-^B^j 

Bj"   total  basic  employment  in  county  j 

bi^j=   basic  employment  in  industry  i  for  county  j,   where 

lfj=   total  nonbasic  en^loyment  in  county  j 

n^4^   nonbasic  en^loyment  in  industry  i  for  county  j,  where 

^i.j^   per  capita  eo^loyment  in  industry  i  for  county  j. 

Si"   average  per  capita  employment  in  Connecticut  counties 
excluding  New  London  County,  see  equation  (1) 

Si^j^   employment  per  capita  figure  that  is  used  to  calculate 
basic  employment   in  industry  i  for  county  j 

Pj"   population  of  county   j 

kj^   ratio  of  total  nonbasic  to  total  basic  employment  in 
county  j,  see  equation  (2) 

Si, J*  annual  income  per  worker  in  industry  i  for  county  j 


415 


APPENDIX 

What   if  only  part  of  a  given  change  in  employment  under 
study   is   basic?      Suppose    (for  instance)    that  only  90  percent  of 
Foxwoods  Casino  customers  come   from  outside  Mew  London  County. 
The  effect  would  be  to  reduce  the  effective  size  of  the  economic- 
base  multiplier,   which  translates  a  given  change  in  basic 
employment   into  the   attendant  change   in  non-basic  employment. 
What   is  the  size  of  the  reduction? 

From  equation    (2)    above,    the  estimated  multiplier    (k)    for      a 
given  area  is   equal   to  the  ratio  of  non-basic    (N)    to  basic 
employment    ( B ) : 

k  «  N/B.  (lA) 

Rewriting  this,    non-basic  employment  is  equal  to  the  multiplier 
times  basic  employment: 

M  «>  kB    .  (2A) 

In  the  present  study,  we  are  interested  in  the  total 
increase  in  employment  in  New  London  County  resulting  from  an 
increase  in  hiring  at  Foxwoods.   The  logic  of  economic  base 
analysis  requires  that  the  former  increase  equal  the  latter 
increase  multiplied  by  the  multiplier.   That  is,  the  ratio  of 
non-basic  to  basic  employment  after  the  changes  should  be  the 
scune  as  it  was  before  they  occurred.   Thus,  we  have  (denoting 
changes  by  prefixing  d  to  the  variable): 

k  "   dN/dB  (3A) 

Rewriting  (3A)  gives 

dN  "   kdB  .  (4A) 

In  the  present  case,  an  increase  in  Foxwoods  employment 
(call  it  dF)  consists  of  two  components,  one  basic  (dF^)  and  the 
other  non-basic  (dF^): 

dF  =  dF^  +  dF,  (5A) 

=  adF  +  (1  -  a)dF  , 

where  a  is  the  average  proportion  of  Foxwoods  workers  who  serve 
customers  from  outside  New  London  County. 

10 


416 


The  new  casino  employment  will  generate  additional  non-basic 
jobs  in  the  county,  some  at  the  casino  itself  (dF,)  and  others 
outside  it  —  call  them  dN,  —  as  a  result  of  the  new  basic 
Foxwoods  jobs: 

dN„  -  JcdF^  .  (6A) 

From  (4A),  we  have 

dN   -  kdB   -   dF,  +  dM,  .  (7A) 

Rewriting  (7A), 

dN^  -  kdB  -  dF,  .  (8A) 

-  kadF  -  (l-a)dF 

-  (ka  -  (1  -  a)ldF 

-  (ka  -  1  +  a)dF 

-  Ia(k+1)  -  l]dF 

Thus,  the  special  "Foxwoods  multiplier",  k',  that  treumxates  an 
increase  in  casino  e]q>loyment  into  new  non-basic  en^loyment 
outside  the  casino  is  equal  to 

k'  -  dN^dF  -  a(k  +  1)  -  1  .  (9A) 

This  special  multiplier  is  increasing  in  a  (the  proportion  of 
Foxwoods  employment  that  is  basic )  and  thus  decreasing  in  ( 1  - 
a):  The  higher  the  proportion  of  non-basic  workers  at  the  casino, 
the  smaller  will  be  the  multiplier  k'. 

The  total  effect  on  employment  of  a  given  increase  in 
Foxwoods  hiring,  given  a,  consists  of  three  parts: 

(i)   the  non-basic  jobs  at  the  casino; 

(ii)   the  basic  jobs  there;  and 

(iii)  the  non-basic  jobs  elsewhere  created  as  a  result 
of  those  basic  jobs. 

Thus, 

dU  =  dF„  +  dF^  +  dU^  .  (lOA) 

But  we  have  shown  that  the  last  two  terms  on  the  right  are  equal 
to  k'dF  .   Hence, 

dN  -  dF^  +  k'dF  (llA) 

"  dF,  +  [a(k  +  1)  -  IJdP  . 

11 


417 


To  illustrate,  suppose  that  900  of  every  1,000  new  Foxwoods 

employees  serve  customers  from  outside  New  London  County;  the 

rest  serve  county  residents  who  come  to  the  casino.   The  900 

would  be  "basic,"  and  the  remaining  100  "non-basic,"  employees. 

Therefore,  a  -  0.9  and  (1  -  a)  -  0.1  .   We  found  that  k  -  1.23  . 

For  dF  -  1,000  and  dF„  -  100,  from  (llA)  we  see  that 

dM  «  100  •«■  [0.9(2.23)-l]l,000 

-  100  ■»-  [1.007]1,000 

~  1,107  new  non-basic  jobs. 

Thus,  the  total  employment  increase  is  dN  +  dF.  -  2.007  new  jobs. 
Checking  this  result  against  (lOA),  dF,  -   100  , 

dF.  -   900 

dN,  -  1.007 
TOTAL:    2.007  . 


418 


DETERMINANTS  OF  WELFARE  DEPENDENCE:  A  STUDY  OF  AFIX:  CASELOADS 


Subhash  C.  Ray 
Department  of  Economics 
University  of  Connecticut 

Storrs  CT  06269 


419 


Consider  a  population  of  P  individuals  in  a  society.  Assume  that  Y  of  these  P  individuals  are 
of  working  age  and  are  potentially  employable.  The  remaining  R  =P-y  individuals  are  children,  old 
people,  or  disabled  and  are  not  eligible  for  employment.  Among  the  Y  people  eligible  for  employment 
some  will  decide  to  seek  employment  and  participate  in  the  labor  force;  others  will  not  look  for 
employment.  Suppose  that  L  persons  participate  in  the  labor  force  and  H  =Y-L  sUy  out  of  the 
labor  force,  there  are  E  <L  jobs  available.  Thus,  E  persons  are  employed  and  U  =L-E  people 
are  unemployed.  Those  who  are  unemployed  either  depend  on  welfare  or  are  self-supporting  living  on 
personal  wealth.  Let  W^  be  the  numbers  of  persons  who  live  on  welfare  while  looking  for  employment. 
Similarly  S,  is  the  number  of  unemployed  persons  who  are  self-supporting.  Of  the  W  working  age 
people  not  in  the  labor  force    S,    are  self-supporting  and    W^    are  on  welfare. 

Finally,  out  of  the    R    people  not  eligible  for  employment    W^    survive  on  welfare  and  S, 
are  either  self-supporting  or  supported  by  others  not  on  welfare.  Thus,  the  total  number  of  persons  on 
welfare  is    W  =  J^,  +  Wj  *  ''a  •    Similarly,  the  number  of  persons  who  are  neither  currently  employed  nor 
on  welfare  is    S  =S,  tSj+S,.    The  tree  diagram  in  Figure  1  shows  the  division  of  the  population  into 
the  various  categories  defined  above. 

It  is  possible  to  specify  a  relation 

W  =f{P,E,r) 

where  r  is  the  welfare  payment  per  recipient  and  the  other  variables  are  as  defined  above.  We  discuss 
below  the  marginal  effect  of  a  change  in  each  of  the  three  independent  variables  on  the  number  of  welfare 
recipients. 

Consider,  first,  an  increase  in  population  (P)  holding  employment  {E)  constant.  Then 
the  extra  person  must  be  one  among  the  (U  +  W  +  i?)  people  not  currently  employed.  The  probabUity 
that  this  person  will  be  on  welfare  is 

The  marginal  effect  of  an  increase  in    P    on    W    is    »r,  >  0  . 

Next  consider  an  increase  in  employment  (E)  due  to  an  increase  in  the  number  of  available 
jobs.  If  everything  else  remained  unchanged,  the  new  job  employs  a  person  currendy  unemployed  but 


420 


looking  for  a  job.  This  person  could  be  either  self-supporting  or  currently  on  welfare.  If  the  person  is 
actually  currently  on  welfare,  the  new  job  reduces  the  number  of  welfare  recipients  by  one.  The 
probability  that  theperson  is  being  taken  off  the  welfare  rolls  is 


h'.+S, 


Thus 


,-.*, 


l5-'.<° 


Finally  consider  an  increase  in  the  amount  of  welfare  payment.  Assuming  that  the  change  does 
not  exceed  average  non-labor  income.  Hence,  it  does  not  become  worthwhile  to  surrender  one's  property 
income  and  become  eligible  for  welfare. 

An  increase  in  welfare  payments  would  alter  the  labor  force  participation  decision  for  some 
people.  This  affects  the  distribution  of  working  age  persons  (Y)  betweoi  participants  (L)  and 
non-participants     (N)  .     If  a  person  moves  out  of    L    to    N,     (s)he  could  currently  be  either  in 

£  or  in  U.  When  the  person  makes  a  transition  from  £  to  N  the  person  would  add  to  Sj 
This  is  because  the  individual's  non-labor  income  has  not  changed.  Hence,  if  (s)he  decided  to  work 
before,  an  increase  in  welfare  payment  is  not  going  to  induce  this  individual  to  switch  from  employment 
to  move  out  of  labor  force  but  stay  self-supporting.  As  (s^e  adds  to  Wj ,  total  welfare  dependence 
(W)  would  increase.  We  continue  to  assume  here  diat  the  number  of  jobs  available  has  not  changed. 
Hence,  if  an  employed  person  quits,  some  one  out  of  the  cunently  unemployed  people  still  in  the  labor 
force  would  take  the  vacant  job.  If  this  newly  employed  person  is  currendy  self-supporting  (one  from 
S^)  there  is  no  effect  on  W.  If,  on  the  other  hand,  the  p^son  is  currently  on  welfare,  transition 
from  W^  to  E  would  reduce  welfare  case  load.  It  is  possible,  however,  that  a  person  previously 
looking  for  a  job  while  surviving  on  welfare  may  now  decide  to  drop  out  of  the  labor  force  and  decide 
to  suy  on  welfare  after  an  increase  in  welfare  payment.  Thus,  die  probability  diat  a  person  filling  diat 
newly  vacant  position  would  move  out  of  wel^e  is  even  less  than  iij  defined  earlier.  In  any  case,  an 
increase  in  welfare  payment  increases  case  load  ceteris  paribus. 

An  indirect  effect  of  such  increase  in  welfare  dependence  is  diat  some  people  in  die  S,  category 
(e.g.,  dependent  children  of  workers)  automatically  move  to  the  W^  category  when  their  providers 
move  out  of  employed  status  and  become  welfare  dependent.  Hence,  die  total  effect  of  an  increase  in 
welfare  payment  would  be  even  greater  than  what  is  measured  by  the  direct  impaa. 

Figures  2a-2b  illustrate  the  labor  force  participation  decision  of  a  person  currendy  unemployed 
and  surviving  on  non-labor  (non-welfare)  income.  The  horizontal  axis  measures  die  individual's  leisure    ( x ) 
and  the  vertical  axis  measure  a  composite  consumption  good     ( / )  •     Let    Xq    show  die  endowment 


421 


of  time  and  Xf^y^  shows  the  person's  non-labor  income.  The  line  z^y^  is  the  person's  'budget 
line",  the  slope  of  which  corresponds  to  the  wage  rate.  In  figure  2a  the  point  P,  corresponding  to  the 
tangency  of  this  budget  line  with  one  of  the  indifference  curves  of  the  individual  is  the  optimal  point.  The 
indifference  curve  through  P,  is  higher  than  the  indifference  curve  through  y^.  Hence,  the 
individual  would  be  better  off  working  rather  than  dropping  out  of  the  labor  force  and  living  on  non-labor 
non-welfare  income. 

Now  if  this  person  is  not  able  to  fiod  a  job,  the  individual  will  be  force  to  move  to  the  point 

Yq    as  the  next  best  alternative;  but  (s)he  would  continue  to  look  for  employment.  Assume  that  the 

amount  of  welfare  payment  is    x^d^  <  x^yo    and  that  people  with  ind^endent  income  are  not  eligible 

for  welfare.  The  individual  is  clearly  better  off  as  self  supporting  rather  than  as  a  welfare  recipient  with 

not  other  non-labor  income. 

In  Figure  2b,  the  individual's  indifference  curve  through  y^  is  higher  than  die  one  tangent  to 
the  'budget  line'  at  P^ .  This  person  is  better  off  staying  out  of  the  labor  force  and  remaining  self- 
supporting  on  non-labor  income. 

The  individual  considered  in  Figures  3a-3b  has  no  non-labor  income  and  has  to  either  work  or 
survive  on  welfare.  The  point  d^  on  the  vertical  line  x^d^  shows  the  individual's  consumption  of 
leisure  and  the  consumption  good  when  on  welfare.  Note  that  the  individual  becomes  ineligible  for 
welfare  if  the  person  has  a  job.  Hence  the  person's 'budget  line' is  XqZq.  In  figure  3a  the  tangency 
point  P,  corresponds  to  a  higher  indifference  curve  than  the  one  through  the  point  d^.  Hence,  the 
person  would  be  better  off  by  working  by  than  remaining  on  welfare.  If  the  person  fails  to  get  a  job, 
(s)he  would  stay  on  welfare  at  the  point  d^  but  would  continue  to  look  for  a  job  and  remain  in  the 
labor  force. 

In  Figure  3b,  on  the  other  hand,  the  indifference  curve  through  dg  is  higher  than  the  one  at 
the  point  of  tangency  P^.  Thus,  this  person  would  decide  to  remain  on  welfare  and  not  look  for  ajob. 
This  person  is  out  of  the  labor  force. 

Now  suppose  that  the  welfare  payment  (while  still  less  than  x^yo )  increased  to  x^d, . 
Clearly,  the  optimal  choice  of  a  person  shown  in  figure  2a  or  2b  would  not  be  affected  by  this  change. 
Further,  a  person  shown  in  figure  3b  would  have  all  the  more  reason  to  continue  to  stay  out  of  the  labor 
force  and  live  on  welfare.  In  figure  3c,  however,  we  find  a  person,  who  would  find  that  the  consumption 
bundle  at  d,  corresponding  to  the  increased  welfare  payment  is  superior  to  the  previous  optimal  bundle 
P^  ,  which  was  better  than  the  bundle  d^  corresponding  to  the  previous  lower  rate  of  welfare 
payment.  If  this  person  was  already  employed,  (s)he  would  drop  out  of  the  labor  force  and  decided  to 
live  on  welfare.  If  the  person  was  unemployed  and  searching  for  a  job,  the  individual  will  drop  out  of 
the  labor  force  and  would  stay  on  welfare  permanently. 


422 


When  an  employed  person  quits,  the  vacant  job  would  be  filled  by  some  one  currently 
unemployedbutlooklngforajob.  However,  as  explained  above,  5,  has  remained  unchanged  while  ^f^ 
has  declined  (because  some  people  have  moved  from  W^  to  ffj)  .  Hence,  the  probability  that  this 
job  would  take  some  person  off  welfare  has  become  lower.  Overall,  the  effect  of  an  increase  in  wel^e 
payment  is  to  put  more  working  age  people  on  welfare.  Other  persons  (children  and  elderly)  dependent 
on  these  people  would  also  become  welfare  dependent. 


The  Empirical  Findings: 

We  specified  the  model: 

CASE,  =  /3o ♦  |3i  POP, ♦  02 ^**Pi * ^i Pf*"^! *^i> 

where 

CASE  =  number  of  AFDC  payment  recipients, 

POP  =  population  in  year    i    or  state    i. ,  " 

EMP  =  number  of  persons  employed, 

PMT  =  average  payment  per  recipient  per  month  in  year  or  state    i . 

The  model  was  first  estimated  using  annual  time  series  dau  for  the  entire  United  States  covering  the  years 
1960-87.  The  resulting  regression  (corrected  for  first  order  autocorrelation)  is  reported  in  Table  1.  The 
payment  variable  was  deflated  by  the  consumer  price  index  to  adjust  for  inflation. 

The  estimated  regression  corrected  for  a  first  order  autocorrelation  of  0.66  shows  a  reasonable 
goodness-of-fit  and  all  the  coefficients  are  both  of  the  right  sign  and  statistically  significant.  The 
coefficient  of  POP  implies  that  for  every  100  unit  increase  in  population  holding  employment  and 
other  variables  constant,  total  AFDC  case  load  would  increase  by  about  241  additional  recipients. 
Similarly,  1000  additional  jobs  would  reduce  AFDC  cases  loads  by  192  persons.  For  $1  increase  in  real 
welfare  payments  per  person  per  month  total  case  loads  would  increase  by  7,212  thousand  people  nation- 
wide. 

Separate  r^essions  were  also  run  with  cross  section  data  for  the  years  1987,  1988.  and  1989. 
In  each  of  these  regression,  the  SO  states  along  with  Washington  DC  were  the  units  of  observation.  The 
year-specific  regressions  used  welfare  payments  in  current  (rather  than  constant)  dollars  as  the  relevant 
explanatory  variable.  The  results  are  reported  in  Tables  2-4.  Several  interesting  points  should  be  noted. 
First,  the  coefficient  of  employment  in  the  cross  section  regressions  is  higher  than  what  was  found  in  the 


423 


time  series  regression.  This  agrees  with  the  general  view  that  cross  section  data  reveal  long  run  effects 
while  short  run  effects  are  found  from  time  series  data.  Second,  the  coefficient  of  BMP  is  smaller  in 
absolute  value  in  1988  and  1989  than  in  1987.  Moreover,  it  is  not  quite  so  significant  in  the  later  years. 
It  may  be  recalled  that  the  unemployment  rate  was  lower  in  1987  than  in  1988  or  1989.  When  U 
increases,  its  break  down  into  5,  and  W^  may  change.  If  relatively  more  of  the  unemployed  people 
are  self-supporting,  the  probability  that  a  vacant  job  is  filled  by  a  person  previously  on  welfare  becomes 
lower.  Of  course,  when  the  data  for  1988  and  1989  are  pooled  together,  the  coefficient  of  employment 
becomes  significant  although  smaller  in  absolute  value  than  in  the  1987  regression. 

The  population  variable  also  had  the  anticipated  positive  sign  and  was  significant  in  every 
regression.  The  measured  marginal  effect  of  an  increase  in  the  population  by  1 ,000  would  be  between 
1  IS  and  173  more  persons  on  welfare  (judging  by  the  cross  section  regressions).  The  time  series  model 
implies  241  more  persons  on  welfare. 

Finally,  all  regressions  show  that  as  welfare  payments  rise,  welfare  dependence  also  rises.  The 
estimated  coefficient  from  cross  section  regressions  range  between  975  and  1386.  The  large  coefficient 
value  (7212)  from  the  time  series  regression  actually  shows  the  magnitude  of  nation-wide  increase  and 
should,  in  fact,  be  scaled  by  a  factor  of  SO  when  comparing  with  the  state-level  effect  measured  from  the 
cross  section  regressions. 

Practical  IinpUcation 

The  Foxwood  High  Stakes  Bingo  and  Casino  envisages  creating  9,500  new  full-time  jobs.  The 
various  regr^sions  reported  in  this  paper  show  that  1,000  new  jobs  would  reduce  AFDC  dependence  by 
somewhere  between  131  and  260  persons.  Payment  per  recipient  per  month  in  Connecticut  was  around 
$200.00  in  1989.  Even  the  low  estimate  would  imply  a  reducti  n  of  $2,986  millions  in  AFDC  payment 
over  a  year.  The  actual  saving  would  be  even  more  if  the  current  rates  of  payment  are  higher  than  the 
$200.00  per  person  per  month  rate  assumed  in  these  calculations. 

Finally,  this  study  focussed  only  on  AFDC  payments.  Changes  in  employment  also  affects  other 
kinds  on  welfare  payment  like  unemployment  insurance,  supplemenatl  security  income,  food  stamps  and 
so  on.  When  all  these  are  accounted  for  the  overall  impact  would  be  considerably  greater  in  magnitude. 


424 


Table  1:  Regression  with  Time  Scries  DaU  (1960-87) 

Deoendent  Variable:  CASE 

independent 
variable 

coefficient 

't'  ratio 

POP 

0.2413 

3.84 

EN(P 

-0.1921 

-2.14 

PNfr(real) 

7212.3250 

4.11 

Intercept 

-20380.5668 

-7.39 

P 

0.6653 

R' 

0.8483 

425 


Table  2:  Regression  nith  SUte-Levd  Cross  Section  Data  (1987) 

Dependent  Variable:  CASE 

independent 
variable 

coefficient 

V  ratio 

POP 

0.1733 

3.31 

EMP 

-0.2600 

-2.29 

PMT(current) 

1385.97 

3.77 

Intercept 

-196.557 

-♦.55 

R' 

0.9176 

426 


Table  3:  Regression  with  SUte-Level  Cross  Section  DaU  (1988) 


independent 
variable 

coefficient 

*t*  ratio                       1 

POP 

0.1151 

2.63 

EMP 

-0.1312 

-1.42 

PMT(cuiTent) 

975.57 

3.05 

Intercept 

-156.870 

-♦.07 

R' 

0.9222 

427 


Table  4:  Regression  with  State-Level  Cross  Section  Data  (1989) 

Dependent  Variable:  CASE 

independent 
variable 

coefficient 

'f  ratio 

POP 

0.1435 

2.79 

EMP 

-0.1914 

-1.75 

PMT(curTent) 

995.116 

3.30 

Intercept 

-159.435 

-4.38 

R' 

0.9322 

428 


l>le  S:  Regression  with  State-Uvel  Cross  Section  Data  (1988-89) 

Dependent  Variable:  CASE 

independent 
variable 

coefficient 

't'  ratio 

POP 

0.1260 

3.95 

EMP 

-0.1544 

-2.28 

PMT(current) 

986.599 

4.63 

Intercept 

-157.542 

-6.12 

R' 

0.9272 

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BIOORAPHXBS 


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JOHN  M.  CLAPP 
Biographical  Sketch 

John  M.  Clapp.  Professor  in  the  Department  of  Finance,  University  of  Connecticut, 
teaches  real  estate  njaAet  analysis  and  ocber  courses  related  to  real  estate  and  finance.  He 
started  teaching  real  estate  at  the  University  of  California  at  Los  Angeles  in  1974.  He  has 
worked  with  the  Brookings  Institution,  The  Lincoln  Institute  of  Land  Policy,  the  U.S.  General 
Accounting  Office,  Citibank,  The  Califomia  Department  of  Savings  &  Loan,  Liberty  Savings 
&  Loan,  Peoples  Bank  and  Society  for  Savings.  His  work  for  these  organizations  was  on  the 
location  of  office  buildings,  office  market  analysis,  cycles  in  regional  employment  growth,  the 
^praisal  of  special  purpose  properties,  mortgage  underwriting  and  the  design  of  adjustable  rate 
mortgages. 

In  1987-88,  Professor  Clapp  was  director  of  a  task  force  formed  by  the  Office  of  Policy 
and  Management,  State  of  ConnecticuL  His  team  of  seven  professionals  and  two  support 
persons  evaluated  Connecticut's  system  of  property  tax  equalization  across  the  169  towns.  Tbe 
task  force  proposed  and  helped  implement  numerous  options  for  executive  and  legislative 
changes  in  the  design  of  tax  equalization.  As  part  of  this  process.  Professor  Clapp  built  and 
analyzed  an  extensive  data  base  —  including  employment,  population,  housing,  and  real  estate 
price  indices  —  for  each  of  the  169  towns  in  Connecticut.  His  continuing  work  on  real  estate 
price  indices  has  been  cited  in  the  New  York  Times,  The  Hartford  Courant,  The  Commercial 
Register,  and  other  publications. 

Professor  Clapp  has  published  extensively  in  the  Journal  of  Regional  Science,  The 
AREUEA  Journal,  the  Journal  of  Urban  Economics,  The  Quarterly  Journal  of  Economics,  The 
Journal  of  the  American  Statistical  Association,  and  other  journals.  He  is  on  the  editorial  boards 
of  the  AREUEA  Journal.  The  Journal  of  Real  Estate  Finance  and  Economics  and  the  Journal  of 
Regional  Science.  In  1987  he  published  the  Handbook  for  Real  Estate  Market  Analysis  with 
Prentice  Hall.  He  is  a  graduate  of  Harvard  College  (BA  with  high  honors  in  Economics)  and 
Columbia  University  (M.  Phil,  and  Ph.D.).  In  1993,  he  was  selected  as  a  fellow  of  the  Homer 
Hoyt  Institute,  Weimer  School  for  Advanced  Smdies. 


.  435 

BIOGRAPHICAL  SKETCH 

September  19, 1993 


Dennis  Heffley  is  a  graduate  of  Stanford  University  (B.A.)  and  the  University  of 
CalifcHnia  at  Santa  Baibara  (MA.,  Ph.O.).  Since  1973,  be  has  taught  in  the  Department  of 
Economics  at  the  University  of  Connecticut,  where  he  is  a  Professor  of  Economics.  An 
active  member  of  American  Economic  Association,  Eastern  Economic  Association, 
Western  Economic  Association  and  the  Regional  Science  Association,  Professcv  HeiTley's 
research  has  spanned  a  range  of  tc^ics  in  applied  mioDecooomics,  especially  in  the  fields 
of  urban  and  regnal  economics  and  health  economics.  Mud)  of  this  woilc  has  involved 
the  use  of  multi-sector  models  to  study  specific  policy-related  questions.  His  recent 
research  has  focused  on:  the  effects  of  zoning,  rent  control  or  other  housing-rdaled  policies 
on  the  structure  of  urban  areas;  the  problem  of  allocating  public  resources  to  infrastructure 
and  human  resource  development;  the  problem  of  achieving  an  efficient  market  striicture  in 
health  care;  and  the  restructuring  of  health  insurance  to  provide  incentives  for  cost 
containment  and  healthier  lifestyles.  Profes